Rocket science – I think you were referring to my graph. Not Alex’s. Pleeze don’t confuse me with him.
I pulled the chart from a discussion we had a couple months ago. In that discussion I plotted both on linear and logarithmic scales. (linear plot below).
In that discussion someone asked what “normal” growth rates are. Well, that’s anyone’s guess. FOr these plots I tried to put a growth rate that intersected the bottom of the market in 1996-1997.
I made a half-assed projection based on the same percentage decline as the last housing bust, then extending it for several years further at the peak rate of decline.
I came up with an optimistic correction of a nominal 20% decline through 2012. Adding about 3% inflation that is a 41% real decline. This is the optimistic range of what I expect. When take more conservative growth rates (e.g. 5% from a “fair value” price in 1998) it’s a bit worse as you indicate in the 40-50% range, depending on how quickly it happens.
Sorry I didn’t have the entire explanation. I was too lazy to look up the entire thread. Just wanted to show Alex that some of our guesses on the market are based on analysis rather than being pulled completely out of thin air.
As a rocket scientist you should appreciate the log scale. A constant growth (or decline) rate shows up as a line on a log scale. Some people have a problem seeing the linear scale go exponential.
