The median price of houses sold in the United States in March 1963 was $17,800.
Adjusted for inflation to March 2025, that would be $186,600.
But in fact the median price of houses sold was $416,900, 123% higher.
A 36% shock to that as contemplated by the Fed's recent bank stress tests could bring the median price of houses sold down to $266,800, dialing the clock back to 2013, which is still 43% higher than what the long term price would be merely adjusted for inflation.
A large number of homeowners who have purchased homes from 2020 when prices skyrocketed by 31% could be instantly underwater in this scenario. There have been 4.73 million new large bank consumer mortgage originations since 2Q2020.
Add losing a job and boom, you could have another foreclosure crisis all over again.
The 2007 shock to the median price of houses sold was only 19% 1Q2007-1Q2009, with prices not recovering until 1Q2013, but many millions of foreclosures were completed over the period.
A mitigating factor for homeowners generally today is owners' equity in real estate, which was almost 62% in 2005, but in 2025 is almost 72%, ten points higher. We haven't seen a level like that since 1960.
Owners' equity had crashed by a quarter to 46% by 1Q2012, the lowest on record in the post-war.