HOUSE PRICES have recently attracted unusual attention because for the first time in decades large areas in the United States have experienced declining nominal house prices. Such house price declines are not unprecedented. Between 1929 and 1933, nominal house prices declined nearly 25 percent, although there was virtually no real decline. And more recently, in the early 1980s, the prices of homes in oil-producing regions fell. In Canada, too, cities such as Vancouver have experienced sharp price declines following rapid increases. These episodes have not been widespread enough, however, to dislodge the view that housing is a solid long-term investment. This view is largely based on the experience of the 1970s, when house price inflation outpaced overall price increases by almost 30 percent.