Source: www.calculatedrisk.com
I last published this chart two months ago and the trend has not abated. US House prices continue to decline and are currently around February 2003 levels. Include inflation and the housing prices are even lower.
I guess some of the lessons in this include:
- never take increasing house prices for granted like many of us do in Australia
- household wealth in the US continues to decline whilst their biggest asset continues to decline in value
- the economic crisis is not over yet
With continued declines this will probably mean more people defaulting on their loans and more problems for the US banks. Whilst a handful of banks have paid back some of their TARP money there are still a few that haven’t yet. This housing problem is part of a vicious cycle that needs to stop so hopefully the fiscal stimulus in the US will kick in soon.