Worse than the Great Depression

The sharp fall in house prices in the first quarter provided further confirmation that this housing crash has been larger and faster than the one during the Great Depression. On the Case-Shiller index, the 1.9% q/q fall in the first quarter meant that since the start of 2006 house prices have fallen by 33%, eclipsing the 31% fall in the late 1920s and early 1930s. The only comfort is that the latest monthly data show that towards the end of the first quarter prices started to fall at a more modest rate. Nonetheless, prices are likely to fall by a further 3% this year, resulting in a 5% drop over the year as a whole.