Mastery

Adjusted Case Schiller Housing Data

Fascinating! I agree with much of what has been said. The OFHEO indexes say much the same thing. Average Year on Year appreciation is slightly under 6% a year averaged over a 20 year period. This is almost identical to per capita Federal spending appreciation year on year over the same period as well as with appreciation of per capita disposable income. This also matches the UK inflation rate almost identically as well as the appreciation of the price of gold. By contrast Stock market appreciation over the 20 years to August of this year was nearer to 10% average annual year on year appreciation. Thus substantial part of the stock market collapse seems related to overheating of equities rather than simply the credit crunch from the housing bubble which (on a long term basis anyway) is something of a myth EXCEPT in that it encouraged consumer borrowing through home equity loans, sub-prime, second mortgages or onerous consumer finance and largely based on an illusion of wealth creation from home equity that on a TRUE inflation adjusted basis simply did not exist. In turn this lenders were fuelled by easy capital from the banking system and from a Wall Street flush with cash direct from the Fed after the dot com bust and from absurdly overvalued equity markets creating compulsory purchase through indexation.