Home Values since 1890

by Doug on Aug.03, 2009, under Homes

I love charts like this. They are so insightful.

Since the current boom started in 1997, I wonder if a perspective homeowner saw this chart in 2005 whether they would have bought a house. You could clearly see the housing bubble and if you believe markets revert to their norm that the house value fall would be brutal. As it is turning out. I do not like to speculate but in this case it seemed a sure bet in 2005.

Thanks to Steve Barry, a regular reader of the Big Picture Blog, who took the long-term Case Shiller chart dating all the way back to 1890 and then adding his own projected red dotted line showing how much further would need to fall until it reverts to its mean.

Note the Federal Reserve was invented in 1913 (one year before WW1) with one of its purposes being to prevent bank runs and depressions, seven of which this Country suffered through in the 1800s.

As of May 2009 the index was at 139 (the index is posted 2 months after). In looking at the home prices at the 20 cities involved in the index, most have stopped falling and actually (slightly) started an upward trend.

Home prices – S&P/Case-Shiller home price indices