Interesting observation on a graph

[Navydoc]

The way I interpret this graph is that it demonstrates what housing appreciation SHOULD be when fundamentals are observed. If you were to draw a “line of best fit” (sorry if that brings old calculus demons out in people’s memories) through the entire graph you can imagine a straight line with perhaps a 15 degree or so angle with the x-axis. That is where we should be. Take that extreme right sided peak of current housing prices and imagine it falling to the extrapolated point on the best fit line. I don’t think it’s impossible to see prices adjust to that point. The other deviations on the graph are either very temporary, or associated with a cataclysmic cultural event, i.e Great Depression, WWII. You’ll notice that after the last unexplained peak 1n 1890 was followed by a 30 year trough with exactly the same slope of the line we imagined earlier.

I want to see houses become affordable, but in that context I find this graph frightening.

[stockstradr]

Here’s S&P 500 adjusted for inflation….

(see above graph in previous post)

My comment:

Now you know why my portfolio is primarily bearish positions against the S&P 500.

[(former)FormerSanDiegan]

Is there a possibility that in the mid 90’s, something drastic has happened?
Yes, it’s called flooding the world with cheap money, and under-reporting inflation.

[ibjames]

when you guys use words like “scary” and “frightening” what are you saying?

Are you nervous that this will be the new plateau and this will now trend sideways for another 30 years? Or that it is a huge fricken mountain on one side, we’ve reached the peak, and now there’s going to be another mountainside going down on the other?

[kewp]

Are you nervous that this will be the new plateau and this will now trend sideways for another 30 years? Or that it is a huge fricken mountain on one side, we’ve reached the peak, and now there’s going to be another mountainside going down on the other?

Look at every financial bubble in human history.

How many have collapsed vs. trending sideways?

[Ex-SD]

“Or that it is a huge fricken mountain on one side, we’ve reached the peak, and now there’s going to be another mountainside going down on the other?”

If history repeats itself, prices are going back to 1994-1995 levels.

[cr]

Navydoc, you read my mind.

The line might look like this, give or take:[img_assist|nid=4776|title=Graph|desc=|link=node|align=left|width=466|height=378]

The trough at the Great Depression was a result of job loss for the most part, right?

So was the insane high to the far right a result of job growth? Right…

We’re used to graphs like this but most people aren’t. This is crazy. And of course this is national, and local is different, but as a national comparison the argument for why this is not logical is valid: incomes cannot support these price levels.

Home prices track with incomes at this level, and incomes according to an MSN article have barely kept up with inflation. Assuming they mean core inflation, which excludes food and energy, then really wages are down, and home prices will follow.

[Navydoc]

Thanks, I havn’t worked out all the nuances of attachments with this program, but you did exactly what I described. You’ll notice that the depression dip is exactly parallel to your drawn line.

To address the question of what will happen next, I use frightening becuase I feel a depression is not at all out of the realm of possibilities, and we could see another depression trough.

I’m pretty well positioned to survive a depression, but most people aren’t, and I’m not so naive to think that a depression won’t have any effect on me and my family. But perhaps we got it coming to us.

For what we’re about to receive may we be truly thankful.

[JWM in SD]

“Yes, it’s called flooding the world with cheap money, and under-reporting inflation.”

You took the words out of my mouth.

Has anyone noticed that there are some consistently bad actor posters on this site??? Here is a clue, the OP is one of them and has been for sometime now.

How many houses do you have on the market RB??? How Many???

[Author]

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