“Pricing U.S. homes in gold reveals that housing has fallen by two-thirds from its 2005 peak.”
“Nominal housing prices have returned to 2003 levels. But when priced in gold, the 2003 valuation was 420 ounces of gold. Now that nominal prices have returned to that level today, the median house will only fetch 160 ounces of gold.
But if nominal prices revert to pre-bubble valuations (1997-98), which is the typical course of popped asset bubbles, then we could see housing become even cheaper when priced in gold.
That is, if gold continues rising and housing continues declining, then it is certainly possible that the median house price could fall to 100 ounces of gold–a mere 20% of its 2005 peak. ”
“The point is to consider housing in relation to purchasing power/relative performance, not just in nominal dollar terms. Housing will always have value as shelter and land will always have value as productive dirt, but we must be skeptical of the constant hype that “a home is your best investment.” “
