Monday, February 23, 2009

The Housing Chart That's Worth 1000 Words

The Housing Chart That's Worth 1000 Words: "Here's the big problem with almost all the current rhetoric about the housing crisis: It presumes that the goal should be to get house prices rising again. The problem with that idea is that, even after a 25% decline, house prices are still way too high.

Even if there is a government mechanism that could stop house prices from plummeting and artificially pump them up again, therefore, it would just postpone the inevitable.

Below is the Robert Shiller chart that makes this crystal clear (produced by the New York Times and taken from this excellent article by James Quinn). And below the chart is what James Quinn thinks about it."