Back to 2004?

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Economist Robert Samuelson argues today in the Washington Post that home prices have to fall at least 20%, back to 2004 levels, before sales can start to climb again and the housing-related economy revives.

Such necessary-medicine arguments are tough to make. Especially when you’re talking about people losing their homes through foreclosure. But, as Samuelson notes, home prices climbed more than three times as fast as incomes from 2000 to 2006. That’s unsustainable. A fall back to 2004 price levels would still leave many homeowners with 30% gains over the decade.

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