A ways to go yet in the housing crash - A bit of Econmic Common Sense

Stated in real today money, Houses have always cost about 150,000 dollars more or less for the last several decades. What we saw as increasing house prices was in fact decreasing values to the dollar.

If you could buy 150,000 dollars worth of goods today, it would have only taken about 30,000 in 1976. OK? Get it?

So, now to look at a chart of the average value of a home in the USA since 1976 till today and what has and will happen puts in perspective what has yet to happen. House prices will tumble another 20% from here and then flatten out. They must. The big money house prices reached was an artificial level. It still is.

The interest rate cut that just happened that is causing lots of people to refinance will just mean that at some point in the future there will be more people under water financially. This new wave of refinance just deepens the pain when houses fall further in price.

It's not pretty but it's the truth. What goes up must come down. The red line is the real value in today's dollars of houses inflation adjusted.

The Blue line is the price in dollars in the economy of the time. You see that things got pretty out of whack and now have to resolve. Hang in there folks. It'll be OK. You'll afford a nicer house some day. BUT, if you are way deep underwater in a McMansion Mortgage, well, as the song says, You'll be MOVIN ON UP to the East Side.