One further thought on this. The studies that I have done comparing real rates to housing historically, would suggest that housing prices will not drop based on their current relationship to real rates, they actually would rise if they do what they have historically done. It is almost impossible for me to believe that could happen, but it is what my research has told me. Of course that is based on the CPI, which seems to be a joke as far as what it tells us inflation is currently.
I have thought that same exact thing and I thought it strange that while there is a general consensus on this board that inflation will rise, gold will rise, but yet many believe that housing prices will go down 50%. It has been pointed out many times that housing prices track inflation, but inflation has been going up, not down (especially when you consider the amount of money being printed by the feds).
In my calculations, when I apply a rate of inflation towards housing prices and calculate a 50% drop over six years, housing prices will hold up at least moderately well (my test case $400k house lost 20k over 6 years, which is not a whole lot). I’m probably missing something in my calculations, but it seemed like an interesting case to see how the years pan out and how that calculation fares.
