That area is great. Google continues to build there.
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1 yr prior to ATH, yes. Now is about 40% over 1 year (start price increase, end price lower than ATH by 5-8%).
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The always great Calculated Risk:
The data seems to argue for the slow house price growth scenario, but my view is the most likely scenario is house prices will stall in nominal terms and decline in real terms . I’ve been looking at the 1978 to 1982 period for lessons, and that would suggest a stall in house prices (hopefully we avoid a recession).
Haven’t thought about real house prices, but it makes sense. Nominal house prices tend to be sticky. Sellers hate to sell at a lower price than their neighbors. But selling at the same price 2 or 3 years later means the real price is lower.
The last two years’ appreciation is one for the record book:
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I don’t think anyone is arguing 20% annual gains are the “new normal”. I am surprised the the Great Recession didn’t even hit a 15% annual decline. This just goes to show people expecting 50% declines don’t understand why housing is different from stocks. Just look how tiny the declines are in prior recessions.
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What if CPI starts declining from next month? Mortgage rate has started to decline already. House prices have already declined 5-8% from ATH but is still 10-12% ytd. Lumber prices have already been declining.
“You could make a strong case that in a lot of housing markets the last 10% of home price appreciation was purely aspirational and irrational, and that’ll come off the top really fast,” Palacios says. “That’s exactly what we’re all seeing right now.”
Good. What’s next?
The silver lining, Palacios says, is that supply chain constraints and labor shortages prevented an even greater ramp up in homebuilding. If that would’ve happened, we might have gotten a housing bust—instead of just a housing correction.
Another reason preventing a bust is demand is much greater than supply.
I am seeing 20% decline in 3rd tier areas such as Mountain House etc. In 2nd tier places like San Jose, Santa Clara, etc. I am seeing 10% decline. In top tier like PA, MP, LA, maybe 5-10% decline. I expect price decline to be proportional to the price rise in pandemic era but I doubt prices will fall to the pre pandemic level as that would imply another 20% drop in third tier places like Mountain House and another 10% in 2nd tier and another 5% in top tier. But who knows, if Fed stays course then it may.
Having said that homes are selling for below listing now versus 20% overbidding just 6 months ago, and inventory is rapidly rising, meaning good time for buyers coming back.
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The other option is that nominal prices basically hold but real (i.e. inflation adujusted) prices decline an additional 10–15% over the next few years (especially if CPI stays elevated). Calculated risk did a study and found that on average it took 3.5 yrs from the peak for housing to reach a bottom in real prices during a down market. So we may have a ways to go…
Historical norms do not apply here in this artificial market as there are too many speculators / investors in the market. This time it took just 4 months to drop half way down to pre pandemic prices in many areas. So just like rapid rise (which was also anomaly compared to historical standards) the fall may be rapid too. I think both rates will peak and prices will bottom by end of year.
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@manch and you like to quote academic like Schiller on “real” prices. Since this is a RE forum, I assume all of us are RE investors 
What is the relevancy of real prices to RE investors? $1M of cash today is $1M of cash few years later, if I don’t buy the house today and buy it few years later, I miss out few years of rent… I am assuming positive cashflow, so also miss out a few years of positive cashflow.
I won’t go that far to call it “artificial”. With Fed intervention, things seem to happen much faster. Also I don’t understand the term “historical”… I realize some use past 10 years, some use past 40 years, some use past 100 years… historical is ?
No, it’s not. If I put my $1M in an index fund for 3 years that appreciates by 10%/year in nominal terms (the historical average), I can buy the same house for $1M in 2025 and have $330k left over to buy a second house in Austin 
. We’re all investors here…long term, nobody in their right mind let’s cash sit idle!
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So you are betting two transactions would be in your favor:
a. Index price goes up for 3 years after you have bought.
b. House price didn’t go up for 3 years.
Btw, don’t forget about capital gains/ losses
Stock is a much better inflation hedge than housing.
We have two asset classes. The price of one is at or near the top. The price of another is rocking at the bottom. Where should investors put their money?
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This is basically where I am as well. Need to be able to make the case for ≥15% cash on cash return with RE to justify pulling $ out of index funds. The historical average for broad stock indices is 10% and it is as easy as watching paint dry.
How do you know stocks are near bottom? Stocks can easily fall another 20% or even 40% and still remain over or fairly valued.
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Once you bring in other investments, the reasoning become complicated. It can go either way. Is why I didn’t want to say so in the earlier question. It becomes depends.
I call it artificial because its a direct result to easy money and unlimited printing. We have had a historical pandemic and all assets hit historical highs, how come, is there any rational reason behind this other than FIAT debasement. I will not call it anything other than artificially simulated event.
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Nobody “knows”. We all make educated guesses. You make your own guesses and live with the consequences. I do mine and live with mine.
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You enjoy such (frequent?) rebalancing of asset allocation? So far, I didn’t sell any index funds or RE or AAPL holdings. What I do is pump AAPL dividends + opportunistic cash-out refi of existing properties into RE.
Yeah thats why its probably wise to keep some cash (like 10% of NW) for the next year or so as the economy recovers from the historical roller coaster ride it had. You never know where stocks, bonds and RE are headed but you know for sure that cash will yield 2-3% return and will not fall nominally. And who knows where the next best opportunities will appear so better to be prepared.
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= intervention 
Correct equivalence?
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