[ChuckMcM]

I was going to say the same thing, basically that article notes that house prices have tumbled 40% and that is the biggest asset most people have, and if you're leveraged (which is to say you have a mortgage) then the contribution of your house toward your net worth probably went away, and so now you are 'less wealthy'.

That reasoning completely sidesteps the fact that houses should not have ever risen to the prices they did. The sudden 'house wealth' bubble was directly attributed to extremely bad fiscal policy pretty much throughout the ranks. And while a number of us in Silicon Valley have already learned the lesson 'your not really rich if your wealth is all in a bubble asset' the rest of the country got to learn this too. It sucks, but its more like "you know what your house will be worth in another 15 to 20 years when it would have gotten there based on a reasonable fiscal policy and a 2% economic growth rate.

(and yes it appears to be a story from 2 yrs ago, just when the real estate market crash was in everyone's mind, although this reporter seems to have picked it up today for a few hits during an election year.)

[anamax]

> It sucks, but its more like "you know what your house will be worth in another 15 to 20 years when it would have gotten there based on a reasonable fiscal policy and a 2% economic growth rate.

Any reason for using 2% growth instead of something closer to the US average (which is around 4%)?

http://visualizingeconomics.com/2010/11/04/log-scale-long-te...

[ChuckMcM]

When I'm doing armchair economic analysis I use the 2% growth rate as its one that pretty much everyone agrees is the 'floor' of all estimates. So if you read my comment and did the math, and 15 to 20 years from now looked at your house value, you may find I exactly called it, but you may find that it was a bit under as the economy grew better than that. The chance that you would see lower than 2% growth is small (but non-zero!). There was a time (pre-2000 btw) when I would use the more optimistic numbers when planning ahead :-)

[Danieru]

If I remember my macro-economics course 2% (or was it 3%) is a natural growth rate for a mature economy. We of course never see this rate since we always go for booms until we bust.

3% may appear low but it means that your economy will double in ~23 years, or about one generation.

[arethuza]

Here is someone else claiming that 2% is the average:

http://seekingalpha.com/article/224600-2-real-per-capita-gdp...

[NB I have no idea which one is correct!]

Edit: The two studies have quite different starting dates - one is at the start of the 19th century and the other at the end.