History 101---Comparing Japan's Real Estate Bubble to our own

Recently, I was watching TV and a commercial for the National Association of Realtors came on saying something to the effect of, "There has never been a better time to buy a home"---Obviously the were referencing the recent price drops in property values---But what's to say that they can't drop even more.

Just this week,JP Morgan cut its dividend so that it could be prepared for a 40% Peak to trough drop in housing prices in the united states---But what if things get worse.

So I went to the trusty source of Wikipedia and found the following chart from the Economist in June 2005.

The article starts off hitting the nail on the head--stating, "The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops"

The Chart Compares Japan from 1980 - 2005, and an index of US, UK & Australia from 1995 - 2005. If you look at Japan---House prices dropped for at least 15 Years! (1990 - 2005)

It's also important to note 2 things (1) The UK & Australia had higher home appreciation from 1998 -2005 (2) The US Market continued to appreciate in 2005, 2006 and 2007.

Looking at this chart and better understanding what happened to Japan, I'd say Caveat Emptor--Buyer beware---Prices were being inflated for over 12 years in the US, UK and Australia, and it will likely take longer than just 2 years to make the National Association of Realtors correct in their premise that, Now is the best time to buy a home.