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Biggest decline since the Depression. We think.


Is this the biggest decline in housing prices since the Great Depression? People have been asserting it so often, and with such authority, that I assumed it must be a proven fact. Just in case, though, I looked into it yesterday. I was surprised to find that there’s no hard numerical evidence for the claim. The best I can say after poking around is that it’s probably true. In fact, it’s very likely true. But I can’t say that it’s true beyond the shadow of a doubt.

Follow me as I try to confirm this well-known “fact.”

First stop was the National Association of Realtors, which has been cited in some news stories as the source of the not-since-the-Depression statement. Nope, not us, said spokesman Walter Molony. Its data goes back only to 1968.

OK, then what about the Census Bureau? The oldest annual data series I could find from Census goes back to 1963. Census does have a once-a-decade series that clearly shows a decline from 1930 to 1940, roughly the period of the Depression. There are no decadal declines since, but you can’t tell from this series whether there might have been a one-year decline in some decade.

Federal Reserve Chairman Ben Bernanke seemed like a pretty authoritative source. He said in 1995 that “we’ve never had a decline in housing prices on a nationwide basis.” But that quote turns out to be an offhand remark during a television appearance, and it was before he became Fed chairman and had to speak ultra-cautiously. (And it couldn’t have been true, since we know that prices did decline in the 1930s.)

For a minute I thought I had proof: an economist from the Federal Reserve Bank of St. Louis wrote last year that “the United States has not experienced a large, nationwide decline in nominal house prices since the Great Depression of the 1930s.” I emailed him for his sources. Oops. He said he couldn’t remember where he got that stat, though he believed it to be true. (The paper was on another topic, regional busts.)

Robert Shiller, the real estate numbers guru from Yale, has some historical data on his website, but it’s not national, it doesn’t go back to the Depression, and Shiller himself says “these data are somewhat outdated, and of interest only to researchers.”

Without hard data, I’m left with something Walter Molony of the National Association of Realtors told me. He said the trade group asked some members who were “real oldtimers” if they knew of any annual housing price drops from their younger days, and they didn’t.

So that’s it. Unless something authoritative emerges, this widely quoted statistic is hinging on the memories of “real oldtimers” who used to sell houses back in the 1940s and 1950s. Is this a great country or what?


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