Southern California Current Home Price Decline vs. 1990's
Home Price Decline: Why Home prices Still Have a Long Way Too Fall
December 19, 2008 by Jeremiah Allen, US Housing Update.com / HousingBubbleBust.com

These charts compare Southern California's home price drops during the 1990's vs. the current housing price plunge, along with inflation.
As you can see, at the end of the 1990's SoCal housing slump, home values barely beat inflation. 
Now looking at to current price decline (chart on right) you can see that home prices still have a long ways to fall to fall back near inflation adjusted levels.

Represented here are Los Angeles (in blue), San Diego (in red), and Orange County (in orange).  The green line represents inflation. 

There is a common saying in the business world, "the business cycle never fails".  The meaning of this saying is that if something gets too overpriced then it is due for a price correction.  The decline in home prices that we are currently witnessing in California and throughout the nation is just simply due to the fact that homes became way overpriced. 

The housing decline is not a tragedy, it's not a cause for alarm, and it's not something that we need the government to step into and try to stop.  The drop in home prices is just the free-market business cycle saying "enough is enough, let's bring prices back down where they should be".  In fact, the plunge in home prices is a welcome event for many responsible people who actually have a down payment and are ready to step into there first home at a reasonable and affordable price.

All of the government interference that we have been seeing in the form of stimulus packages, bailouts, foreclosure prevention policies, and bank procedure interventions is just an attempt to keep home prices over inflated and keeping Americans in debt!  In most parts of the country, tax costs are calculated based on home valuations and sales prices.  Higher home prices = higher tax revenue for government agencies and less money for homeowners.

The housing decline is being used as an excuse to pump billions of unregulated money into the very same corporations and banks that caused the housing bubble in the first place. 


The bottom line, home prices still have another 30% - 50% to decline in California to fall back in line with inflation.  This is also true for many parts of the country that saw home prices surge during the bubble years.  In addition, parts of the country that didn't see home values surge upwards will still see home values fall due to this long and deep recession that we are entering!
(The information / charts below Created : June 13, 2005  *** Last Updated : Nov 25, 2008 by author @ www.HousingBubbleBust.com
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chart courtesy of HousingBubbleBust.com

                        Color Scheme 

 New Business Cycle, Appreciation Equals Inflation. 

 Appreciation Greater Than Inflation, under 10%. 

 Runaway Appreciation, Foundation of The Bubble, between 10% and 20%.

 Bubble's Peak, over 20%. 

 Market Stalling, Plateau, Year-Over-Year Appreciation Stops. 

 Year-Over-Year Appreciation approaches 0%. 

 Bubble Busted, Recession, -ve appreciation.  

 Recovery , +ve appreciation again.

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   Copyright © 2005 by Author. This material may be distributed only subject
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