Saturday, August 25, 2007

A housing deflation

The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950. ...

The reversal is particularly striking because many government officials and housing-industry executives had said that a nationwide decline would never happen, even though prices had fallen in some coastal areas as recently as the early 1990s. ...

On an inflation-adjusted basis, the national median price — the level at which half of all homes are more expensive and half are less — is not likely to return to its 2007 peak for more than a decade, according to Moody’s Economy.com, a research firm. ...

In all, Global Insight expects a decline of 4 percent, or roughly 10 percent in inflation-adjusted terms, between the peak earlier this year and the projected low point in 2009. In California, prices are expected to decline 16 percent — or about 20 percent after taking inflation into account.
--David Leonhardt and Vikas Bajaj, NYT, on why I'm glad I don't own a house. Of course, these same forecasters were predicting continued housing price rises just a short while ago.

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