Price Declines as a Percentage

[Doofrat]

When you see those price declines in the future, remember that a present decline wipes out more past gain than it seems. Here’s a chart listing those percentages.

Eg. If prices decline 30% (column A), that takes out 40% of the prior appreciation (column B).

A…….B
66% 200%
50% 100%
47% 90%
45% 80%
41% 70%
37% 60%
33% 50%
30% 40%
23% 30%
17% 20%
9% 10%

So in the extreme, say you bought a house in 1997 for $195,000 (rough median back then), and it is now worth $575,000. This is an increase of almost 200% or three fold. It would only take a market decrease of 66% to bring it back down to $195,000.

Using the professor’s chart of Median Single-Family home price: San Diego-Carlsbad-San Marcos, I calculated what percentage decrease would be needed to get the present median house of $575,000 back down to the median for past years. Assuming my math’s correct:

Date……….. Median that year … % Decrease
2005 Jan 1…….. $550,000 ………… 4
2004 …………… $450,000 ………… 22
2003 …………… $375,000 ………… 35
2002 …………… $325,000 ………… 43
2001 …………… $282,000 ………… 51
2000 …………… $250,000 ………… 56
1999 …………… $225,000 ………… 61
1998 …………… $200,000 ………… 65
1997 …………… $195,000 ………… 66
1996 …………… $190,000 ………… 67
1995 …………… $190,000 ………… 67

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