Weekly Special | March 28, 2022

Surprising History Of Home Prices

If you study history (specifically the history of home prices), then you know that home prices rarely drop. There ARE times when home prices fall, but there are some key indicators that we have to spot before real estate enters a depreciation stage.

This graph plots the average US home price since 1890, derived from the S&P/ Case-Shiller home price indices. Yeah, I’ve included 131 years of home prices so that we fully investigate our history before determining the future. For the past 131 years, we have seen home prices (on average) move 3.38% higher annually. The red-dashed line plots the average annual growth, but there were times when home prices actually fell.

When we analyze the declining prices over the past 100 years, we find that prices fell on just four occasions, and two of them were small one-year shifts:

The Great Depression – The longest and deepest downturn in the history of the United States lasted more than a decade, beginning in 1929 and ending during World War II in 1941.

The Great Recession – The 2007 to 2009 economic crisis was followed by what was a long but unusually slow recovery.

1959 – The average home price fell by just one-tenth of one percent.

1991 – The average home price fell by 1.3%.

That means there were only two significant price declines in housing in the past 100 years!

The original one-page Weekly Special PDF is still available.