Weekly Special | April 12, 2021

An Amazing Fact About Home Prices

In my quest to research the housing market like it has never been viewed before, I decided to look at average home prices over time. Since my data from Tallahassee only goes back to 1991, I decided to examine US home prices because Shiller provides data going back to 1890.

Amazing Fact About Home Prices Home prices rarely retreat.

If we omit the housing bubble bursting that cause five straight years of home price declines, then only 2 years since 1941 have recorded price declines. The average home price in the US dropped 1/10th of 1% in 1959 and dropped 1.3% in 1991. That’s it! Two small dips in 66 years (3%).

When we do count everything, we find that prices dropped 7 times since 1941 (9%), 18 times in the past 100 years (18%), and 28 times since 1890 (21%).

So the trend, up until the housing bubble bursting, was towards fewer declining years. Whether you believe the future will hold less than 3% (or 9% or 18% or 21%), you should discount the reports that call for home prices dropping any time soon.

History tells us it just won’t happen.

Additionally, I believe the US housing market is heading into an inevitable hyperinflationary period due to the limited supply of homes and the soaring costs of building materials. Prudent homeowners should find the home they want for the next 15 years and lock it in with today’s low mortgage interest rate.

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