BioInvestor

12 Observations on Residential Housing

That chart has resembled the dot.com bubble. The chart was a really clear illustration of the insanity. I don't know why the Fed didn't expect housing prices to fall!


On Apr 30 07:22 PM billddrummer wrote:

> Bio,
>
> I saw the same chart, and it reminded me of an expression that Milton
> Friedman said: "All aberrations revert to the mean." That's not a
> direct quote, but a paraphrase. In short, the aberrant runup in housing
> prices over the past 4 years is now reverting to the mean: A stable
> growth rate about 1% higher than inflation. Since inflation was averaging
> less than 2% annually over the past 4 years, but housing prices were
> rising at 10-40%, depending on where you measured it, to correct
> to the mean would call for housing prices to fall anywhere from 4%-35%,
> also depending on where you measure it.
>
> That's happening right now nationwide.
>
> As prices revert to their mean, further dislocations in the housing
> markets should be expected. But once this takes place, the next step
> is working off the excess inventory piled up while more houses were
> getting built than could be purchased.
>
> Look for housing's 'recovery' in 2012.

12 Observations on Residential Housing

Thanks for this great resource. Perfect!

I have one question: about three weeks ago, I saw a very interesting graph on Good Morning America (if I recall correctly). It plotted the real average US house price over time for about the last seventy years are so. The chart was eye-popping in that it showed that the last five years were really an aberration. I have searched the GMA website and can't find the graph. Does anyone know where I can get that chart or the numbers? Thanks in advance!