Historic House Price vs. Rent Ratio

[svelte]

The graph looks practically identical to the house price index graph that was used, specifically the one from:

http://www.irrationalexuberance.com

click on link in the second bullet, then click on the Fig 2.1 tab.

The only difference is that some of the minor ups and downs have been smoothed out – otherwise you could practically lay the two graphs over each other.

I also went to:

http://www.bls.gov/data/home.htm

to find where the rent data came from, but there is so much stuff on that page I couldn’t find it.

In any case, I think all the graph in this thread is showing is that housing prices have been the driver in the graph up-and-downs (since it matches the house index graph), while rents have been fairly consistent in 1880 dollars since 1880. Otherwise, the graph shape would have changed shape, wouldn’t it? I dunno. I’m tired of thinking about it.

[Bugs]

We in the trade refer to the relationship between rents and sale prices as a factor rather than a percentage.

Instead of:

Rent / Sale Price = %

We normally use:

Sale Price / Rent = Gross Rent Multiplier (which is a factor)

Your apparent point remains the same: between 1950 – 1980 or so the ratio of rents/sale prices increased from about .4% to about .50%. Between 1980 – 2000 or so the trendline itself – which is comprised ot the highs and lows – stayed generally constant at about the .50% range, and only during the bubble did it exceed that.

Your chart also demonstrates why Rich uses the 50-year trendline rather than a 100-year trendline. A (real) new paradigm did crop up after WWII, based on a couple factors.

[Bugs]

We in the trade refer to the relationship between rents and sale prices as a factor rather than a percentage.

Instead of:

Rent / Sale Price = %

We normally use:

Sale Price / Rent = Gross Rent Multiplier (which is a factor)

Your apparent point remains the same: between 1950 – 1980 or so the ratio of rents/sale prices increased from about .4% to about .50%. Between 1980 – 2000 or so the trendline itself – which is comprised ot the highs and lows – stayed generally constant at about the .50% range, and only during the bubble did it exceed that.

Your chart also demonstrates why Rich uses the 50-year trendline rather than a 100-year trendline. A (real) new paradigm did crop up after WWII, based on a couple factors.

[Bugs]

We in the trade refer to the relationship between rents and sale prices as a factor rather than a percentage.

Instead of:

Rent / Sale Price = %

We normally use:

Sale Price / Rent = Gross Rent Multiplier (which is a factor)

Your apparent point remains the same: between 1950 – 1980 or so the ratio of rents/sale prices increased from about .4% to about .50%. Between 1980 – 2000 or so the trendline itself – which is comprised ot the highs and lows – stayed generally constant at about the .50% range, and only during the bubble did it exceed that.

Your chart also demonstrates why Rich uses the 50-year trendline rather than a 100-year trendline. A (real) new paradigm did crop up after WWII, based on a couple factors.

[Bugs]

We in the trade refer to the relationship between rents and sale prices as a factor rather than a percentage.

Instead of:

Rent / Sale Price = %

We normally use:

Sale Price / Rent = Gross Rent Multiplier (which is a factor)

Your apparent point remains the same: between 1950 – 1980 or so the ratio of rents/sale prices increased from about .4% to about .50%. Between 1980 – 2000 or so the trendline itself – which is comprised ot the highs and lows – stayed generally constant at about the .50% range, and only during the bubble did it exceed that.

Your chart also demonstrates why Rich uses the 50-year trendline rather than a 100-year trendline. A (real) new paradigm did crop up after WWII, based on a couple factors.

[Bugs]

We in the trade refer to the relationship between rents and sale prices as a factor rather than a percentage.

Instead of:

Rent / Sale Price = %

We normally use:

Sale Price / Rent = Gross Rent Multiplier (which is a factor)

Your apparent point remains the same: between 1950 – 1980 or so the ratio of rents/sale prices increased from about .4% to about .50%. Between 1980 – 2000 or so the trendline itself – which is comprised ot the highs and lows – stayed generally constant at about the .50% range, and only during the bubble did it exceed that.

Your chart also demonstrates why Rich uses the 50-year trendline rather than a 100-year trendline. A (real) new paradigm did crop up after WWII, based on a couple factors.

[ltokuda]

Bugs, thanks for the clarification with the Gross Rent Multiplier.  You noted that a new paradigm cropped up after WWII based on a couple of factors.  Could you give us more details on this?

[ltokuda]

Bugs, thanks for the clarification with the Gross Rent Multiplier.  You noted that a new paradigm cropped up after WWII based on a couple of factors.  Could you give us more details on this?

[ltokuda]

Bugs, thanks for the clarification with the Gross Rent Multiplier.  You noted that a new paradigm cropped up after WWII based on a couple of factors.  Could you give us more details on this?

[ltokuda]

Bugs, thanks for the clarification with the Gross Rent Multiplier.  You noted that a new paradigm cropped up after WWII based on a couple of factors.  Could you give us more details on this?

[ltokuda]

Bugs, thanks for the clarification with the Gross Rent Multiplier.  You noted that a new paradigm cropped up after WWII based on a couple of factors.  Could you give us more details on this?

[not-so-average-joe]

@Itokuda

Very interesting chart. Could you give us more details on which index you used for the rent? As someone pointed out above, the page has too much information.

@bugs

I don’t really see the point of 50 years vs 100 years. Who knows whether today makes the start of a new 50 year?

[not-so-average-joe]

@Itokuda

Very interesting chart. Could you give us more details on which index you used for the rent? As someone pointed out above, the page has too much information.

@bugs

I don’t really see the point of 50 years vs 100 years. Who knows whether today makes the start of a new 50 year?

[not-so-average-joe]

@Itokuda

Very interesting chart. Could you give us more details on which index you used for the rent? As someone pointed out above, the page has too much information.

@bugs

I don’t really see the point of 50 years vs 100 years. Who knows whether today makes the start of a new 50 year?

[not-so-average-joe]

@Itokuda

Very interesting chart. Could you give us more details on which index you used for the rent? As someone pointed out above, the page has too much information.

@bugs

I don’t really see the point of 50 years vs 100 years. Who knows whether today makes the start of a new 50 year?

[Author]

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