Some first-time buyers are feeling a sudden hurry to buy, fearing higher prices if they wait. But they are also worried about the long-run outlook for home prices.
For the United States, according to the S&P/CoreLogic/Case-Shiller National Home Price Index, adjusted for inflation, real home prices rose 45 percent from February 2012 through May 2020, the latest data. (I helped to create the index but have no financial interest in it.) Other sources indicate that prices remain high. That is a remarkable record, considering that the United States is grappling with the coronavirus pandemic, a major recession and social upheaval. In that stretch, there were no down years.
It would be easy to assume that the boom times for housing will go on forever, but that would require ignoring the disaster that led to the most recent great financial crisis, a little more than a decade ago.
Recall some recent history. Real home prices rose 75 percent from February 1997 to a peak in December 2005, apparently unaffected by the 2001 U.S. recession and the steep stock market decline of 2000 to