This interesting graph from McKinsey highlights the tremendous run up in home prices on inflation adjusted terms over the last 40 years since 1970. This runup reversed abruptly last year, with the US shedding 10% of value and the remainder of the global economies losing in aggregate around 4%. This slide equates to nearly $3.5 trillion dollars of personal wealth evaporation. Considering the immense mortgage leverage overhang on many of these homes and the chance that any appreciation will be slow to come, this global housing bubble will certainly dampen growth in consumption and global economic recovery.
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