According to data released last week by the Federal Housing Finance Agency, home prices have peaked and are beginning to decline in many urban areas. Since 2018 prices in some urban areas had grown to be greater than at their peak in the 2006 bubble, it is fair to say that we have seen another bubble inflate and begin to deflate.
The above chart shows home price indices adjusted for inflation using GDP deflators for six metropolitan areas whose prices have been made volatile by growth management. Late-2018 prices in San Francisco and Seattle (as well as San Jose and some other areas) were considerably higher than in 2006, even after adjusting for inflation. Now they appear to be declining. Continue reading
