Our latest NineShift prediction is that the overall value of existing housing will fall another 30% by 2020.
This would be a drop of 60% from the pre-recession high of housing values around 2006. Now we have the historical data to back up our prediction. Robert J. Shiller of Yale University has tracked existing home values back over 100 years.
Between 1911 and 1920 existing home values fell dramatically. The reason? Because 50% of people lived on family farms or in small villages and they moved to big cities. All those farmhouses and small town homes plunged in value. Many became worthless and were left to decay.
Today the same thing is happening. Young people are moving to dense communities. Suburban home values are declining, and will continue to decline because young people do not want to live in suburbs. Suburbs are too costly in terms of time, waste environmental resources, and are not close to trains and light rail, or shops and stores, or restaurants, or anything. Suburbs are intentionally far from everything.
That does NOT mean that every existing home will go down in value. This is the overall average.
Now Shiller suggests that World War I caused the decline 100 years ago, but that has no economic rationale or basis. And the U.S. was in the war for only two years, from 1917-1918. And society was growing more prosperous, not less. So his data is superb, his analysis just off-base.
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