Worse than the Great Depression


According to the Economist, after inflation is taken into account, U.S. home prices have fallen by 18% over the past year. That’s worse than the 10.5% drop during 1932, the worst year of the Great Depression.

Here in Canada, we live in a different world. Here, home prices can keep going up forever, right?

Maybe not. The latest Scotia Economics report on real estate trends concludes that “After many false calls, there is now convincing evidence that Canada’s housing market has come off the boil.”

The report points out that we’ve actually already seen house prices fall in Canada—though you may have missed it. After inflation, the average resale home price in Canada actually went down by almost 1.5% first quarter 2008 over first quarter 2007. 

Not many people are expecting that trend to continue for the year, but who knows? Not many people were predicting an 18% decline in U.S. home prices at their peak either. 

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Worse than the Great Depression

  1. Prices fell from an unstainable high. It’s not like the great depression where home values remained stable for a generation and then dropped 10%. To duplicate that kind of drop,falling from a bubble, home values would have to fall ..from say 2000 values by..60%? I’m guessing.

  2. From what I can tell, it looks like we are passing through the nadir a real estate pain right now. MLS listings (supply of real estate) are starting to top out and even drop right now throughout the United States. With supply stable and falling, prices should stabilize as well. Also, the fact that the US and Canada have a decent population growth rate means that prices simply can’t remain low for long. Check out http://www.listingsupply.com

  3. The fall in prices are no where near an end. The rise was large in many places (exceeding 150% in costal areas) We should look for at least %30 correction when all said and done. The priices will also not move much in terms of an increase for many years +5 would be my guess once we do find a bottom.

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