Home Market Trends in U.S.A

An interesting graph that I saw in New York Times shows a history of home prices in this country from nineteenth century onwards. According to the graph, the market price of homes have been appreciating at an average rate of 5% but in the last decade home prices show sharp upward and downward spikes. In the first part of the last decade home prices showed unprecedented highs and some cities saw prices appreciating by as much as 20 to 25%. Then began the sharp downward trend.
Experts have been arguing about how much of the bubble and bust has been caused by the subprime crisis. Alan Greenspan's policy of loosening the credit markets certainly contributed to the bubble. Fueled by the increased liquidity due to securitization of mortgage market, lenders have been giving loans right and left, most of them to borrowers with doubtful credit history. When the bubble burst, most of these borrowers defaulted and thus resulted the first recession in U.S in the twentieth century.
Hopefully the home prices would pick up their upward trend soon enough.