After seeing Alex’s Graph I couldn’t resist.
BTW, love the log scale to minimize the effect.
First let me admit that I do not know the pedigree of the housing data in the graph but believe it to be accurate as it came from a spreadsheet that I downloaded a while back in May of 2007 from a link from a previous thread.(as best I can remember). THe ‘Alex” data is a few points eyeballed off of his graph and approximated in between but gets the basic shape.
That said, just put together a quick picture of the data and some curves assuming 6.2% (that appears to be what Alex used) and even a generous 5% growth in value and then a 4% growth rate. The anchor point for the ‘growth’ data is the first available point I picked off of the ‘Alex’ data.
Some observations, not to be taken as fact:
Although I think 5% is generous it is curious that it basically intersects the bottom of the last correction in the mid 90s.
So if one were to ASSUME the 5% growth rate is what houses should expect to appreciate over a long period of time, the prices should decrease approximately the following amounts for the “bottom” to occur in the following years.
And if the “growth” is at ~5.5% it matches the 2017 prediction in one of his “A Bubble Primer” post on when per capita income divided by the median-priced home meets the historical average based on prices remaining constant and income increases at an annual rate of 4.6%
Again, just observations but it looks like the fall may be with us a while.
rs
