Boots & Sabers

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0810, 30 Nov 22

Housing Prices Decline

Given that housing prices have gone up about 40% in just two years, there could be a lot more correction.

This latest Case-Shiller report—which found a 2.2% price decline in U.S. homes since June—means we’ve moved into the second biggest home price correction of the post-World War II era. On paper, it’s tied with the 2.2% drop between May 1990 and April 1991, however, given that the index is a three-month average, we know the October numbers will surpass that mark. That said, it’s still far below the 26% peak-to-trough decline that occurred between 2007 and 2012.


How can this 2.2% drop already qualify as the second biggest correction of the post-World War II era? It boils down to the fact that, historically speaking, home prices on a national basis have been fairly sticky. Sellers resist going below market comps unless economics forces their hand.


“I think that the religion people had from 1946 to 2008, that housing prices always go up, is dead. My parents believed that it was literally inconceivable for [home] prices to go down,” Glen Kelman recently told Fortune. The ensuing 2008 housing crash broke that “religion” and taught buyers and sellers alike, he said, that home prices can indeed fall. “So folks respond [now] to that [correction] with almost PTSD, and they pull back much more quickly.”


0810, 30 November 2022


  1. jonnyv

    I had this discussion earlier in the year with a friend of mine. We both bought houses about 14 months ago, not quite at the peak of the market, but still at a high point. And I told him that I don’t think that our houses may ever be worth as much as when we purchased them. I assume that my house value will drop at least 15% over the next year or so. And I don’t know when we will see the record lows of interest rates that we saw for the past decade as well driving the market. It seems a bit unsustainable.

    It is possible that in the next 20 years, my home will be worth what I paid for it? Thankfully I don’t plan on moving again so it really doesn’t affect me, and in fact the lower value is better for my taxes.

    Many couples are going to be stuck in their “starter” homes for many years now if the prices drop significantly. I bought my first house in 2007 for 155K, I told my wife that we would only be there for about 5 years and we would sell and move. Within 6 months the house was worth about 90K after the crash. We finally moved, 14 years later when our home was worth more than what we bought it for again

  2. Tuerqas

    16 months ago our house was worth 255,000 (bought 20 years ago for 210,000). We just had an appraisal under 2 weeks ago to open a Heloc and it appraised at 365,000. I feel like country homes retain their value pretty well.

  3. jonnyv

    You might be right T. I also don’t think that the devaluation has hit many places yet. It is starting in the cities then moves to burbs, then maybe to the countryside. My house is still “worth” 50K more than when I bought it. But it is down from the peak earlier in the year by about 50K as well. It will take a while for comparables in the area to start to cool off to justify the lowering of home valuations. Your house may have been valued at 400K five months ago and you wouldn’t have ever known officially. In WI not many people try to sell during the off season, so we may not know the full extent of the cool down until Feb/March in our region.

  4. Mar

    Jonnyv, you missed the elephant and T-Rex in the room.
    This could have been all been avoided if not for Senile Joe Biden and his puppeteers policies.
    Lower prices on homes is completely on the liberals. They caused it with their inflation policies.
    And since you are a proud liberal, you brought this up on yourself.

  5. dad29

    the lower value is better for my taxes.

    You really think that Bayside and MKE County will reduce your prop-tax due to reduced selling value?

    I’ll take that bet…..

  6. Jason

    >the lower value is better for my taxes

    Someone doesn’t understand what a mill rate is… Teehee

  7. Mark Hoefert

    Someone doesn’t understand what a mill rate is

    John Torinus, CEO of Serigraph Sales and weekly Daily News columnist, certainly does not. In yesterday’s column he was giving a sloppy kiss to the West Bend School Board for “lowering the tax rate by 36% since 2016”. He does not show his work, but he cites the mill rate decreasing. In 2016 my house was valued @ $260,300 and the school tax was $1865. In 2022, house value @ $356,000 and the school tax is $1852. As more market value is added to the district, the mill rate should go down. In fact, statewide, the mill rate has trended downward. I checked some friends’ houses. One is Slinger School District – despite a $42M referendum, their net tax went from $1839 in 2016 to $1725 in 2022. Someone I know in the Kewaskum School District went from $2372 to $2242, despite a $28M referendum. The columnist’s house was $3693 in 2016, and $3778 in 2022 – that’s an increase, not a “36% decrease.”

  8. jonnyv

    Mar, none of this could have been avoided. Prices were inflating faster than is reasonable since COVID. New house construction significantly jumped due to lumber and labor prices. That pushed up all the value in housing (and renting). There was no way it was sustainable what housing prices were going for and we all knew it was a bubble just waiting to pop. The question still is, how severe will the pop be and how long will it last?

  9. Tuerqas

    Might be right JV? Our property value went up $8,000 in value between 2007 and 2009. Hobby horse farms only go up. The only problem is that if the wife keeps buying more horses we would have to find another hobby farm to move so we don’t make anything that we don’t then lose in buying a different house.

  10. MHMaley

    Building material prices ( the stuff houses are built with ) increased prices relentlessly during Covid when demand increased and reserve materials they had on hand for resupply were exhausted in 90 days

    Only now are those area’s shipping freely but all the increases have stuck .. for now .

    Prices are going to drop as manufacturers try to buy back market share after being sold out for 2 years

    That combined with higher interest rate means builders and suppliers are looking at next year with trepidation -and opportunity

    Builders have been far more concerned about supply than cost for 2 years .

    That’s no longer the case .

  11. dad29

    You’re correct in the main here, Maley; but let’s not forget that the price of energy (HIGH) has and will continue to have an effect on the cost of making and transporting those materials. And–of course–the cost of labor will continue to rise as contractors try to keep their workforce.

    The price of housing may well diminish, but it’s not going to be some massive drop, unless the economy goes into serious recession in ’23-’24.

  12. MjM

    John Torinus, CEO of Serigraph Sales and weekly Daily News columni…

    John “I have the world’s biggest boner for Lizzy Cheney” Torinus? That doof?

    (“ The country needs her clear-headed, democratic leadership (small “d”) in some highly visible capacity. Brilliant leaders don’t come along that often.” – Torinus, Urban Milwaukee, Aug 27th, 2022 )

    for “lowering the tax rate by 36% since 2016”.

    Even if he meant a 36% drop in mill rate he’s wrong about that. The WB mill rate dropped only 26% from 2016-17 to 2022-23. Meanwhile, the levy went up 13%, or $5 million.

    For the entire state the mill rate went down 23% yet the levy rose 12.75%, or $619 million.

  13. Merlin

    > Builders have been far more concerned about supply than cost for 2 years .

    This has been 100% true for anyone who manufactures anything…. anywhere. Costs have become secondary to reliable sourcing. I discovered just how dependent my North American vendors are on a global supply network. In some cases these supply issues are not going to be resolved anytime soon because the materials are having to be re-sourced because the original foreign component manufacturers have ceased to exist. Some of this is going to require a bit of investment creativity.

  14. dad29

    100% true for anyone who manufactures anything…. anywhere. Costs have become secondary to reliable sourcing

    Some of us have been yelling about this since the GWB/Clinton betrayal of US manufacturers and their employees.

    Now, Red China has the US by the gonads, particularly in such minor items as pharmaceuticals (ALL of them) and chips (MOST of them.)

    Free Trade at its very best!!

  15. dad29

    ADDED: This, along with The Wall, was the single largest component of Trump’s victory……….well………after the possibility of Hildebeeste as President.

  16. Owen

    We had the good fortune that our long-planned downsizing plan coincided with the beginning of the pandemic. We sold our big house for more than we originally thought we could get for it and bought a smaller place for a third of the cost. We’re waiting on a healthy housing correction to buy up a little lake property.

  17. jonnyv

    I honestly wish you the best of luck Owen. I do know that lake house pricing has been hot for at least 5 to 7 years when a buddy was looking. I don’t know what kind of correction we will see on them. Makes me wish my parents hadn’t sold our property up on Legend Lake when I was in college.

  18. Owen

    I’ve spent many a day on Legend Lake thanks to family who had property up there until a few years ago. It’s a beautiful area.

  19. Mark Hoefert

    Ironic that you mention Legend Lake. My neighbors own a campsite up there. This morning we were walking our dogs, and the lady said that last night things were “lit” on the community Facebook page. The school district had passed a $35M building referendum this past spring and yesterday the tax bills came in the mail. The school portion of the tax bill went up 94%, and her net taxes are up about 38%. I checked on a year-round home with a market value of $435,000. The net tax went from $5045 in 2021 to$7139 in 2022. That was a net change of 41.5%. The school tax went from $2196 to $4270.

    Interesting dynamics. Lots of nonresident taxpayers with no vote. Lots of residents that are on tax exempt lands. I think the district is about 1000 students, and the overall performance is dismal.

  20. jonnyv

    When I was like 11 years old, a bunch of family members got together and bought 4 undeveloped lots of land together on Spirit Ridge Rd (N1570, 1566, 1560, & 1550) for $5K each. My grandparents eventually built a house on 1570 and retired up there. When I was in college the 3 undeveloped lots were all sold off for about $20K each as they weren’t being used, like when the kids were younger. My grandparents lived up there for about 20 years before they wanted to move back to Appleton area due to health issues being closer to family.

    Like I said, I was almost out of college, and my parents sold the land without ever telling me (divorce was on the horizon). I doubt I could have bought it anyway at that time, even for 20K. But, would have loved to had the chance had they waited another 3 years or so. Two of those undeveloped lots are now almost 100K each. The others have property and valued at almost 500K.

    The school district was always bad. And I do remember my parents complaining about the different lake fees and such.

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