The chart below is taken from GlobalInsight’s House Prices in America Qtr2 2007.
- Price corrections are defined as declines of at least 10 percent over a period of at least 8 quarters.
- Seventy-nine price corrections are observed over the past 22-year period and are ranked by starting date.
- The median, or typical, price correction is 17 percent.
- The median, or typical, degree of overvaluation prior to a correction is 33 percent.
- The median, or typical, duration of a correction is 18 quarters.
- The more severe the overvaluation, the greater the subsequent declines tended to be: correlation = +0.25
- The more severe the overvaluation, the shorter the duration tended to be: correlation = -0.31