I noted earlier in the week (and incessantly before that) that home prices have a seasonal tendency to rise in the spring and summer even during the midst of a multi-year price decline.

That sounds like a good enough excuse to make a chart.

Below you will find a look at San Diego home prices, as measured by the Case-Shiller index, from 1990 through 1996. These years encompassed the entirety of the five-or-so year home price decline visited upon San Diego after the late-1980s housing bubble.

As you can see, the Case-Shiller index measured a rise in aggregate San Diego home prices for every single year of the long price decline. (Although 1993 just squeaked in there with a one-month, .1 percent increase).

I’ll bet that during each of those spring rallies, a lot of people became filled with hope the housing bust was finally over. But through five of these head-fakes, it wasn’t.

Here for comparison is a look at the current housing downturn:

After an anemic spring bounce in 2006, the Case-Shiller index fell unceasingly through 2007 and 2008, only to finally register an uptick again earlier this year. The lack of spring-summer rallies is a testament to the brutality of this housing crash.

The next graph overlays the two housing crashes in order to compare duration and magnitude:

The price decline this time around has been substantially larger — an outcome that was unsurprising based on the comparatively vast overvaluation of homes coming into the 2005 bubble peak. But while it may feel to some like this price decline has gone on forever, it has not yet endured nearly as long as the 1990s version.

Whether it eventually does so remains to be seen. Either way, the first graph should make it clear that a spring-summer home price rally should not be taken as evidence that the housing bust has come to an end.

— RICH TOSCANO

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