[pvillano]

A sudden switch to depreciation makes housing more expensive, even though prices are going down.

Say you buy a house with a loan, and sell it after x years. The total cost of ownership is interest paid to the bank + buy price - sell price. If you bought a house at $600k expecting to sell it in a few years at $700k, but it'll actually sell for $500k, your TCO went up by $200k. The sudden switch to depreciation made the same house much more expensive to own. Prices have to slowly go from rising to steady and then to falling, otherwisw everyone is suddenly living way beyond their means.