Want to see some scary housing market graphs?
First, this one from the St. Louis Fed allows you to add their Boston home price index by clicking on “edit graph” to see that they’re claiming that prices have already declined in the Boston area.
Next, you can check out the source data from Robert Shiller, one of the lead economists who developed that housing price index, HERE. This a pic of his graph since it’s an excel file that might be hard to read on a phone:
His data lags a few months because he takes a 3-month moving average of sale price increases of individual homes that have sold multiple times, but what I find so eye-opening about it is that it uses inflation-adjusted or “real” numbers rather than dollar amounts to show what the market has done over the numerous crashes and other corrections since 1890. One of his theories is that “real” home prices show a tendency to return pretty close to their 1890 level, which definitely seems to be the case after previous corrections. I find it hard to believe that the insanely long and steep increase we’ve been seeing since 2012 would be the first time that it simply levels off rather than starting to at least gradually decline.
With that said, you can see at my brand-new Metro Boston stats page that *technically* at least the dollar amount of median single-family sale prices are still barely above 2021’s values. But yeah, I’m sure that means that they’re effectively lower once you factor in these high inflation numbers.
Another of Shiller’s theories is that popular opinion about the direction of the housing market will self-perpetuate, helping the market actually head in whatever direction popular opinion thinks it is. At this point, I’m wondering if the housing market popular opinion train hasn’t already left the station heading south. Let’s all tell our neighbors that the market is only leveling off and maybe it’ll come true!
Click HERE to see how your town is doing with the higher interest rates.
