I’ve stopped trying to account for inflation in my analysis. There are too many variables and my poor brain starts to overheat.
If we are going to account for inflation do we use the 3% lie that the government wants us to believe or do we use 9-10% which is closer to reality?
If housing only drops 15% but bread goes to $12 a loaf what does that mean?
If we are dealing with the US dollar how do we account for the introduction of the Amero when it happens? (Google on ‘Amero’ if you don’t know what it is)
Instead of trying to figure out some possible price in US dollars I prefer to think in terms of trends as Bugs and PerryChase are saying.
Two trends are applicable to real estate: sales price to earned income and sales price to rental income. San Diego real estate is several orders of magnitude away from the trend lines in both of these areas.
IMO, reversion-to-the-mean is one of the few absolutes in investing.
Bottom line is that we are a long way from a bottom.
