23 August 2009

Who says house prices always go up?

Anyone hoping that the real-estate market will see a swift rebound, let alone any kind of recovery, should take note of what’s happened in previous bubbles. The bubble in Texas property that burst in the early ‘80s still hasn’t seen a return to pre-bubble values nearly 30 years later.

Now that the myth of ever-rising house prices has been shattered, it may be time to
embrace another inconvenient truth
: that prices can take decades to recover, at least when adjusted for inflation. A study in June by the Federal Housing Finance Agency, a regulator, pointed out that in parts of Texas house prices still languish some 30% below their 1982 peaks in real terms.