So does this mean we’ve hit bottom? Not by a long shot. As a percentage of GDP, household real estate is still pricey. As the chart below shows, the value of homes remains at levels never seen before the current bubble. Homes would have to drop 10 or 20 per cent just to get down to 1980s peak values for houses.
Felix Salmon takes an even dimmer view of the chart. “If this line reverts to the long-term mean, the extra evaporation of housing equity would be utterly devastating,” he writes. “But is there any reason to believe that it won’t?”