50% off is the regular price.

[SDEngineer]

[quote=Rt.66]Another way to look at things:

My national inflation calculator shows 19% inflation from 2002-2008. So if I get 50% off today is that 30% off adjusted for inflation? IE, my dollar was worth 19% more in 2002 when I could have bought a house for say $250k, ($500k bubble price in 2006) than it is today when I pay $250k (50% off bubble price).

If I could go back in time and take $300k with me, my $300k would be worth 19% more in that time; I’m still paying $250k for the house plus… I get the benefit of the left over $50k buying me 19% more goods and services. So I am wealthier in 2002. Thus, 69% off is needed today just to get back to 2002 wealth.

When wages fail to keep pace with inflation (which they have for 20 plus years) then even inflation dictates housing should get cheaper.
[/quote]

Your math is off here.

You’re assuming zero wage growth to get to those numbers, when in fact, on a national level, it has been roughly zero effective growth (adjusted for inflation). Nationally, wages HAVE risen, just not enough to outpace inflation (over the bubble years, you are correct, they did not keep pace with inflation…but they didn’t have zero growth either. I believe the most recent numbers have about a 5% loss of purchasing power since 2000).

That means that a 50% drop in price from peak prices is in fact a larger magnitude drop, because you need to take into account wage growth (which over the long term is roughly equivalent to housing gains). Again though, some submarkets are different. In San Diego, we DID outpace inflation with wages – by a reasonably good margin. Census figures showed a 30% gain between 2000 and 2008.

Assuming that wage increase value, a house bought for 250K in 2000 would be equivalent to one bought for 325K today. So a house that was at 650K at peak, and sold for 325K today would be at the inflation adjusted equivalent of 2000 prices, even if the NOMINAL price was at late 2002ish prices.

[Rt.66]

[quote=Nor-LA-SD-guy][ One thing I would add here is, I think a lot of people on this board keep comparing this bubble to (thinking is like) 1991-1997 .

This bubble is nothing like 1991-1997, in that burst a large part of the industry picked up and left taking a lot of the most talented people in the region with them. That’s not happening this time.

I would guess that when the economy turns, the market will SLOWLY start to recover, That being said I would think by 2017 we would be back close to peak price …

OK everyone go ahead take your best shot ,,, Just kidding.

[/quote]

You are correct. In 1991-1997 “a large part of “the” industry picked up and left”. Today ALL employers are cutting back. Worst unemployment in 25-30 years, right now and gaining steam fast.

As for this depression versus previous ones?

” The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol director of regional economics for the Milken Institute in Santa Monica said”

As for losing talented people we can check that off too. Last few reports I read showed CA is losing upper-middle class educated people in droves and growing only through immigration.

Thanks for playing:)

[Rt.66]

[quote=Nor-LA-SD-guy][ One thing I would add here is, I think a lot of people on this board keep comparing this bubble to (thinking is like) 1991-1997 .

This bubble is nothing like 1991-1997, in that burst a large part of the industry picked up and left taking a lot of the most talented people in the region with them. That’s not happening this time.

I would guess that when the economy turns, the market will SLOWLY start to recover, That being said I would think by 2017 we would be back close to peak price …

OK everyone go ahead take your best shot ,,, Just kidding.

[/quote]

You are correct. In 1991-1997 “a large part of “the” industry picked up and left”. Today ALL employers are cutting back. Worst unemployment in 25-30 years, right now and gaining steam fast.

As for this depression versus previous ones?

” The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol director of regional economics for the Milken Institute in Santa Monica said”

As for losing talented people we can check that off too. Last few reports I read showed CA is losing upper-middle class educated people in droves and growing only through immigration.

Thanks for playing:)

[Rt.66]

[quote=Nor-LA-SD-guy][ One thing I would add here is, I think a lot of people on this board keep comparing this bubble to (thinking is like) 1991-1997 .

This bubble is nothing like 1991-1997, in that burst a large part of the industry picked up and left taking a lot of the most talented people in the region with them. That’s not happening this time.

I would guess that when the economy turns, the market will SLOWLY start to recover, That being said I would think by 2017 we would be back close to peak price …

OK everyone go ahead take your best shot ,,, Just kidding.

[/quote]

You are correct. In 1991-1997 “a large part of “the” industry picked up and left”. Today ALL employers are cutting back. Worst unemployment in 25-30 years, right now and gaining steam fast.

As for this depression versus previous ones?

” The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol director of regional economics for the Milken Institute in Santa Monica said”

As for losing talented people we can check that off too. Last few reports I read showed CA is losing upper-middle class educated people in droves and growing only through immigration.

Thanks for playing:)

[Rt.66]

[quote=Nor-LA-SD-guy][ One thing I would add here is, I think a lot of people on this board keep comparing this bubble to (thinking is like) 1991-1997 .

This bubble is nothing like 1991-1997, in that burst a large part of the industry picked up and left taking a lot of the most talented people in the region with them. That’s not happening this time.

I would guess that when the economy turns, the market will SLOWLY start to recover, That being said I would think by 2017 we would be back close to peak price …

OK everyone go ahead take your best shot ,,, Just kidding.

[/quote]

You are correct. In 1991-1997 “a large part of “the” industry picked up and left”. Today ALL employers are cutting back. Worst unemployment in 25-30 years, right now and gaining steam fast.

As for this depression versus previous ones?

” The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol director of regional economics for the Milken Institute in Santa Monica said”

As for losing talented people we can check that off too. Last few reports I read showed CA is losing upper-middle class educated people in droves and growing only through immigration.

Thanks for playing:)

[Rt.66]

[quote=Nor-LA-SD-guy][ One thing I would add here is, I think a lot of people on this board keep comparing this bubble to (thinking is like) 1991-1997 .

This bubble is nothing like 1991-1997, in that burst a large part of the industry picked up and left taking a lot of the most talented people in the region with them. That’s not happening this time.

I would guess that when the economy turns, the market will SLOWLY start to recover, That being said I would think by 2017 we would be back close to peak price …

OK everyone go ahead take your best shot ,,, Just kidding.

[/quote]

You are correct. In 1991-1997 “a large part of “the” industry picked up and left”. Today ALL employers are cutting back. Worst unemployment in 25-30 years, right now and gaining steam fast.

As for this depression versus previous ones?

” The state’s economic decline is sweeping, making the recession the “worst in the postwar period,” DeVol director of regional economics for the Milken Institute in Santa Monica said”

As for losing talented people we can check that off too. Last few reports I read showed CA is losing upper-middle class educated people in droves and growing only through immigration.

Thanks for playing:)

[Rt.66]

[quote=4plexowner]
“nominal prices”, “inflation adjusted”, “peak prices” – too confusing for my simple mind and, IMO, if you have to play these mental masturbation games you are trying to rationalize something that probably doesn’t make sense [/quote]

Very well put! I was just offering a contrarian spin on the whole “inflation adjusted” angle. In the end I agree with you on the issue.

What I can afford today is what I can afford today, inflation stats don’t change that any. And so many other factors change over time.

[Rt.66]

[quote=4plexowner]
“nominal prices”, “inflation adjusted”, “peak prices” – too confusing for my simple mind and, IMO, if you have to play these mental masturbation games you are trying to rationalize something that probably doesn’t make sense [/quote]

Very well put! I was just offering a contrarian spin on the whole “inflation adjusted” angle. In the end I agree with you on the issue.

What I can afford today is what I can afford today, inflation stats don’t change that any. And so many other factors change over time.

[Rt.66]

[quote=4plexowner]
“nominal prices”, “inflation adjusted”, “peak prices” – too confusing for my simple mind and, IMO, if you have to play these mental masturbation games you are trying to rationalize something that probably doesn’t make sense [/quote]

Very well put! I was just offering a contrarian spin on the whole “inflation adjusted” angle. In the end I agree with you on the issue.

What I can afford today is what I can afford today, inflation stats don’t change that any. And so many other factors change over time.

[Rt.66]

[quote=4plexowner]
“nominal prices”, “inflation adjusted”, “peak prices” – too confusing for my simple mind and, IMO, if you have to play these mental masturbation games you are trying to rationalize something that probably doesn’t make sense [/quote]

Very well put! I was just offering a contrarian spin on the whole “inflation adjusted” angle. In the end I agree with you on the issue.

What I can afford today is what I can afford today, inflation stats don’t change that any. And so many other factors change over time.

[Rt.66]

[quote=4plexowner]
“nominal prices”, “inflation adjusted”, “peak prices” – too confusing for my simple mind and, IMO, if you have to play these mental masturbation games you are trying to rationalize something that probably doesn’t make sense [/quote]

Very well put! I was just offering a contrarian spin on the whole “inflation adjusted” angle. In the end I agree with you on the issue.

What I can afford today is what I can afford today, inflation stats don’t change that any. And so many other factors change over time.

[SDEngineer]

[quote=Rt.66]SDEngineer:

I just found this concerning the Economist/Case-Shiller chart I referenced.

The term “Urban land prices” is misleading as the Japanese report RE values differently than we do. If you check out this explanation of the Japan Urban Land Prices report:

http://www.reinet.or.jp/en/pdf/20081216pdf1.pdf

it appears they look at the value of the land under a house or CR building in reporting (they seperate the value of the building out). So the Case-Shiller chart is not comparing US houses to Japanese raw land per-se. It’s comparing the closest apples to apples report available. [/quote]

No, that was my point. They are NOT looking at the value of the property (land + improvement) – they are seperating out the value of the land ONLY and using that. That’s why it’s the Urban LAND price index, not an Urban HOUSING price index.

“5. Type of Value
The market value of each survey site is estimated through land appraiseal AS IF VACANT (emphasis mine) and is expressed as a price per square meter as of the date of value”

That is very definitely apples to oranges. If they had the HOUSING prices in that index it would have been a valid comparison.

[SDEngineer]

[quote=Rt.66]SDEngineer:

I just found this concerning the Economist/Case-Shiller chart I referenced.

The term “Urban land prices” is misleading as the Japanese report RE values differently than we do. If you check out this explanation of the Japan Urban Land Prices report:

http://www.reinet.or.jp/en/pdf/20081216pdf1.pdf

it appears they look at the value of the land under a house or CR building in reporting (they seperate the value of the building out). So the Case-Shiller chart is not comparing US houses to Japanese raw land per-se. It’s comparing the closest apples to apples report available. [/quote]

No, that was my point. They are NOT looking at the value of the property (land + improvement) – they are seperating out the value of the land ONLY and using that. That’s why it’s the Urban LAND price index, not an Urban HOUSING price index.

“5. Type of Value
The market value of each survey site is estimated through land appraiseal AS IF VACANT (emphasis mine) and is expressed as a price per square meter as of the date of value”

That is very definitely apples to oranges. If they had the HOUSING prices in that index it would have been a valid comparison.

[SDEngineer]

[quote=Rt.66]SDEngineer:

I just found this concerning the Economist/Case-Shiller chart I referenced.

The term “Urban land prices” is misleading as the Japanese report RE values differently than we do. If you check out this explanation of the Japan Urban Land Prices report:

http://www.reinet.or.jp/en/pdf/20081216pdf1.pdf

it appears they look at the value of the land under a house or CR building in reporting (they seperate the value of the building out). So the Case-Shiller chart is not comparing US houses to Japanese raw land per-se. It’s comparing the closest apples to apples report available. [/quote]

No, that was my point. They are NOT looking at the value of the property (land + improvement) – they are seperating out the value of the land ONLY and using that. That’s why it’s the Urban LAND price index, not an Urban HOUSING price index.

“5. Type of Value
The market value of each survey site is estimated through land appraiseal AS IF VACANT (emphasis mine) and is expressed as a price per square meter as of the date of value”

That is very definitely apples to oranges. If they had the HOUSING prices in that index it would have been a valid comparison.

[SDEngineer]

[quote=Rt.66]SDEngineer:

I just found this concerning the Economist/Case-Shiller chart I referenced.

The term “Urban land prices” is misleading as the Japanese report RE values differently than we do. If you check out this explanation of the Japan Urban Land Prices report:

http://www.reinet.or.jp/en/pdf/20081216pdf1.pdf

it appears they look at the value of the land under a house or CR building in reporting (they seperate the value of the building out). So the Case-Shiller chart is not comparing US houses to Japanese raw land per-se. It’s comparing the closest apples to apples report available. [/quote]

No, that was my point. They are NOT looking at the value of the property (land + improvement) – they are seperating out the value of the land ONLY and using that. That’s why it’s the Urban LAND price index, not an Urban HOUSING price index.

“5. Type of Value
The market value of each survey site is estimated through land appraiseal AS IF VACANT (emphasis mine) and is expressed as a price per square meter as of the date of value”

That is very definitely apples to oranges. If they had the HOUSING prices in that index it would have been a valid comparison.

[Author]

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