Jonathan J Miller, Columnist

Housing Bust Wasn't About the House

Although almost everyone thinks that housing prices rose a lot in the mid-2000s real-estate boom, it was the land under the structures that accounted for most of the gains and subsequent losses.

November 11, 2014 at 9:51 PM UTC

By Jonathan J Miller

Jonathan Miller writes about the housing economy and other aspects of real estate. He began a real estate blog, the Matrix, in 2005, and has written a column for Curbed.com. He is co-founder of Miller Samuel, a residential real estate appraisal company, and the commercial valuation firm Miller Cicero.

Most of the value is at ground level and below.
Photographer: Ronda Churchill/Bloomberg

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Unless you live in a cave, you're no doubt familiar with the outlines of the housing bust that marked the beginning of the financial crisis: Real-estate prices plunged, people lost their homes, banks went under and the economy tumbled into a recession. We are still grappling with the hangover.

There's only one issue with this narrative: Housing prices didn't fall that much in the meltdown, or at least the value of physical structures didn't fall much. It was the price of land that imploded. See the chart below: