Dropping like a stone.

The house prices here in Tucson continue to fall.  Presently, the average house price for Tucson is $173,000 down from $282,000 in 2006.  This represents a loss of 38.5%.  Over the same period, the national average house price declined only 30%.

The plot below shows the average house price (on a logarithmic scale) for Tucson, Arizona since 1989.  The first 15 years from 1989 to 2004 showed consistent 5.1%/year increase in house prices.  This was  followed by additional gains due the the housing bubble beginning in 2004.  After increasing to a peak price of $282,000 in 2006 and a sharp decline in 2008, Tucson house prices have been declining at a consistent rate of 9.8%/year since January 2009.

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According to zillow, the home value decline has surpassed the decline during the great depression.  Prices are expected to continue falling (though at a slower rate) due to  excess inventory of homes, high negative equity and foreclosure rates, and weakened demand due to elevated unemployment.

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