David Leonhardt visits a couple of foreclosure auctions and finds that house prices are still falling sharply. However, he seems surprised by this, claiming that by measures of rent and income house prices only have another 5 percent to fall. This is not true. The standard housing series show that house prices must fall another 15-20 percent in real terms to return to their trend levels.
(This is the inflation-adjusted Case-Shiller 10-City Index. These cities had somewhat larger bubbles than the country as a whole.)
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