The length and depth of the current housing recession is rivaling the Great Depression’s real estate downturn, and, with encouraging signs fading, will easily eclipse it in the coming months.
During the Great Depression, home prices fell25.9 percent in five years. The U.S. housing market is now down around 25 percent from its peak in 2006.
As housing price expert Robert Shiller pointed out in September 2008:
Home price declines are already approaching those in the Great Depression, when they plunged 30% during the 1930s [i.e. over a 10-year period]. With prices already down almost 20%, it's not a stretch to think we might exceed that drop this time around.
How does that compare to 2001-2007? The price of Southern California homes is already down 41% [that was before the first-time homebuyer credit, Hamp and other governmental programs temporarily boosted prices]. Southern California hasn't fallen as fast as some other areas, and we're nowhere near the bottom of the market.
Moreover, the bubble was not confined to the U.S. There was a worldwide bubble in real estate.
And the bubble in commercial real estate is also bursting world-wide. See this.
In addition, the percentage of Americans who owned houses during the 1930s was much lower than today, which means that a larger portion of the public is being hurt from falling home prices today as compared to the Great Depression.