Reassessing the magnitude of housing price declines and the use of leverage in the Depressions of the 1890s and 1930s

This paper presents the first repeat sales index for residential housing in any U.S. city spanning the late 19th and early 20th centuries, covering Baltimore from 1880 to 1953. Compared to previous data, the index shows larger declines in housing prices during the Depressions of the 1890s and 1930s. I also find higher leverage entering into those periods than previously understood. I conclude that negative equity in the 1930s was a bigger problem than implied by existing data, rationalizing the extent of foreclosures that occurred.