The NYT gets this one wrong in an otherwise good column on the situation in some of the formerly hot markets. Over the hundred years from 1895 to 1995, real house prices did not rise, according to a data series constructed by Robert Shiller. By comparison, real family income grew at an average annual rate of close to 2 percent a year. This distinction is important. If house prices fall back to their trend level then we should expect to see a real decline of approximately 30 percent, not the 15 percent suggested in this article.
--Dean Baker
