Fascinating analysis from Vladimir Klyuev analysts at the IMF, titled What Goes Up Must Come Down? House Price Dynamics in the United States.
I found the charts at the end of the report particularly compelling — they utterly demolish the calls for a real estate turnaround we heard last week from people who should know better.
Even if you do not want to accept the premise of the 4th chart’s — a mean reversion and overshoot — the first three charts make it hard to argue that we are any where near a bottom.
Price Index, Single Family Existing Homes
Real Home Prices and Rents
What Goes Up Must Come Down? House Price Dynamics in the United States
IMF, July 1, 2008
What went up continues to go down
The Economist, July 26, 2008