I pointed out yesterday that, adjusted for inflation, nationwide home prices are now about where they were in the late 1980s. This backs up a point Yale economist Robert Shiller told me a few months ago: In real (inflation-adjusted) terms, we shouldn't be surprised if housing falls for the next several decades. It's happened in the past, and it could happen in the future.
Some reminded me that this is misleading: Housing is all about location, location, location. Some regions -- particularly those growing faster than the overall economy -- will do much better than others.
That's absolutely right. I pulled up the regional version of the S&P Case-Shiller Housing Index to see how different regions have fared over the last one-, two-, and 10-year periods. Have a look:
Home Price Change, Year Over Year
Home Price Change, 2009-2011
Home Price Change, 2001-2011
Sources: S&P Case-Shiller and author's calculations. Figures not adjusted for inflation.
The standouts for me: Washington, D.C.'s rise over the last decade is still huge (thank you, government spending), Atlanta's 10-year decline is about the same as Las Vegas', and the 10-year gain of some big cities (New York, Los Angeles, Portland) is still considerable.
So yes, it is all about location. But big trends can still be noticed on a nationwide level. While home prices nationwide could drag on lethargically for years, I'm reasonably confident that home construction will make a solid rebound sooner than some expect. That could be good for the economy, and great for companies like KB Homes
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