Mikey

Housing Prices To Return All the Way To Pre-Bubble Levels?

6% annual appreciation isn't sustainable and no institutional investor would ever use this as an assumption in their models. The growth in the price of housing can't exceed real income growth without there being material adverse affects on the economy. From a recent FRB Bank of NY report on housing prices:

"Between 1975 and 1995, real single-family house prices in the United States increased an average of 0.5 percent per year, or 10 percent over the course of two decades. By contrast, from 1995 to 2004, national real house prices grew 3.6 percent per year, a more than seven-fold increase in the annual rate of real appreciation, and totaling nearly 40 percent in one decade. In some individual cities, such as San Francisco and Boston, real home prices grew about 75 percent from 1995 to 2004, almost double the national average."