Following on from part 1, how have the states fared? As I mentioned, I’m keenly interested in how submarkets perform compared to the overall trend.
US House Price Index 1991-2011 by state
Source: FHFA raw data + my own analysis
I hope my point is now made that submarkets behave very differently. Take a look at Nevada (NV). An unfortunate soul purchasing property in 2006 would have suffered a whopping 56% fall in value! However, over the same period in the same (US) market, a property-owner in Texas (TX) enjoyed a 4% increase in value.
The exact reasons will be the subject of endless debate, but I believe that Wendell Cox and the Unconventional Economist might be on to something with their theory that restrictive land-use policies cause the volatility, as cities with responsive policies and easily bring on new supply and keep the price equilibrium fairly stable.