Disaggregating the Bust and Rebound in Housing Prices

Here’s another look at house price trends from the WSJ’s Phil Izzo, breaking things down by metropolitan area and trying to ignore differences in the details of timing.

The basic picture here is of a situation that’s difficult to summarize. In San Francisco, prices plunged and then rebounded strongly. In Dallas and Denver, prices only fell a little and have grown moderately since then. In Phoenix, the rebound has been staggeringly large but the bust was even larger. And in a sense this is what we would want to see in our price data. Land and houses aren’t a homogenous commodity like wheat or oil, and so in a sense there really shouldn’t be uniform price swings.