The chart below is taken from GlobalInsight’s House Prices in America Qtr2 2007.

2007-09-22-price-corrections1.gif

NOTES:

  • 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
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