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[(former)FormerSanDiegan]

Ex-SD –

Your points are well-taken. I agree that home prices are still significantly overvalued (probably by 35% or so in San Diego). I’m just saying that if one believes that dollar devaluation and inflation are on the uptake, then a significant chunk of the housing price correction going forward could be eaten by inflation. It will be a factor.

A lot can happen in 10 years to the value of a dollar due to inflation.

Lets take a stroll through a brief history of home prices in this country during inflationary times:

1970 : Price of a new home = 26,600 *
Median household income = 8734
inflaiton at 6.5%

1975 : Price of a new home = 42,600
Median household income = 11,800
inflation = 14.1%

1980 : Price of a new home = 76,400
median household income = 17,710
inflaiton = 13.5 %

SO, there you have it. During a period that included significant chunks of double-digit annual inflation home prices tripled and income more than doubled.

1990 : Price of a new home = 149,800
Median Household Income = 29,943
inflation = 5.4%

1999: Price of a new home = 195,800
Median household income = 39,973
inflation = 2.1%

Higher inflation does not equal downward pressure on home prices.

* Source : http://www.1970sflashback.com/1970/Economy.asp

[(former)FormerSanDiegan]

Ex-SD –

Your points are well-taken. I agree that home prices are still significantly overvalued (probably by 35% or so in San Diego). I’m just saying that if one believes that dollar devaluation and inflation are on the uptake, then a significant chunk of the housing price correction going forward could be eaten by inflation. It will be a factor.

A lot can happen in 10 years to the value of a dollar due to inflation.

Lets take a stroll through a brief history of home prices in this country during inflationary times:

1970 : Price of a new home = 26,600 *
Median household income = 8734
inflaiton at 6.5%

1975 : Price of a new home = 42,600
Median household income = 11,800
inflation = 14.1%

1980 : Price of a new home = 76,400
median household income = 17,710
inflaiton = 13.5 %

SO, there you have it. During a period that included significant chunks of double-digit annual inflation home prices tripled and income more than doubled.

1990 : Price of a new home = 149,800
Median Household Income = 29,943
inflation = 5.4%

1999: Price of a new home = 195,800
Median household income = 39,973
inflation = 2.1%

Higher inflation does not equal downward pressure on home prices.

* Source : http://www.1970sflashback.com/1970/Economy.asp

[(former)FormerSanDiegan]

Ex-SD –

Your points are well-taken. I agree that home prices are still significantly overvalued (probably by 35% or so in San Diego). I’m just saying that if one believes that dollar devaluation and inflation are on the uptake, then a significant chunk of the housing price correction going forward could be eaten by inflation. It will be a factor.

A lot can happen in 10 years to the value of a dollar due to inflation.

Lets take a stroll through a brief history of home prices in this country during inflationary times:

1970 : Price of a new home = 26,600 *
Median household income = 8734
inflaiton at 6.5%

1975 : Price of a new home = 42,600
Median household income = 11,800
inflation = 14.1%

1980 : Price of a new home = 76,400
median household income = 17,710
inflaiton = 13.5 %

SO, there you have it. During a period that included significant chunks of double-digit annual inflation home prices tripled and income more than doubled.

1990 : Price of a new home = 149,800
Median Household Income = 29,943
inflation = 5.4%

1999: Price of a new home = 195,800
Median household income = 39,973
inflation = 2.1%

Higher inflation does not equal downward pressure on home prices.

* Source : http://www.1970sflashback.com/1970/Economy.asp

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