The Boom and Bust of U.S. Housing Prices from Various Geographic Perspectives
This paper summarizes changes in housing prices during the recent U.S. boom and bust from various geographic perspectives. Nationally, the Standard & Poor’s/Case-Shiller house price index more than doubled in nominal terms during the boom and has fallen by roughly a third subsequently. During the boom, housing prices tended to rise much faster in metropolitan areas in the East and West Coast regions than in the country’s interior. After adjusting for inflation, 7 of 19 metropolitan areas have experienced real declines in housing prices from the start of the boom to the present. Although lower-priced houses showed a larger percentage increase during the boom, higher-priced houses fared relatively better over the boom and bust. Changes in land prices, which are not easily measured, appear to have driven housing prices to a greater extent than changes in the prices of housing structures. Internationally, seven countries experienced housing booms and busts; however, these countries tended to have larger booms and smaller absolute busts than the United States.