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(former)FormerSanDiegan
ParticipantHousing prices may or may NOT follow the percentage of inflation, even in a healthy market. There are many factors that cause housing to go up when times are good and inflation is only one of them. I’ve read quite a few posts since I started reading this board where many a poster automatically figures in inflation when trying to determine where a house should presently be priced. I’m not saying that they’re absolutely wrong…..it’s just my opinion that they are. If “X” house was selling for $500k in 2001 and housing returns to 2001 levels, my opinion is that “X” house will most likely return to a price of $500k……NOT $500k plus the cost of inflation for the years between 2001-2008.
Over long periods of time inflation matters.
Indexing to inflation accounts for distortions in nominal dollar terms. Any economist worth his/her salt accounts for inflation. (Schiff does, Shiller does).One could use prices, relative to incomes (as Rich does) to come up with perhaps a more relevant metric.
If one ignores inflation one might make the mistake of expecting prices to revert to where they were in 1965 when a SFR in Point Loma could be had for about $35K. After all the weather is not that much better now, is it ?
ParticipantHousing prices may or may NOT follow the percentage of inflation, even in a healthy market. There are many factors that cause housing to go up when times are good and inflation is only one of them. I’ve read quite a few posts since I started reading this board where many a poster automatically figures in inflation when trying to determine where a house should presently be priced. I’m not saying that they’re absolutely wrong…..it’s just my opinion that they are. If “X” house was selling for $500k in 2001 and housing returns to 2001 levels, my opinion is that “X” house will most likely return to a price of $500k……NOT $500k plus the cost of inflation for the years between 2001-2008.
Over long periods of time inflation matters.
Indexing to inflation accounts for distortions in nominal dollar terms. Any economist worth his/her salt accounts for inflation. (Schiff does, Shiller does).One could use prices, relative to incomes (as Rich does) to come up with perhaps a more relevant metric.
If one ignores inflation one might make the mistake of expecting prices to revert to where they were in 1965 when a SFR in Point Loma could be had for about $35K. After all the weather is not that much better now, is it ?
ParticipantHousing prices may or may NOT follow the percentage of inflation, even in a healthy market. There are many factors that cause housing to go up when times are good and inflation is only one of them. I’ve read quite a few posts since I started reading this board where many a poster automatically figures in inflation when trying to determine where a house should presently be priced. I’m not saying that they’re absolutely wrong…..it’s just my opinion that they are. If “X” house was selling for $500k in 2001 and housing returns to 2001 levels, my opinion is that “X” house will most likely return to a price of $500k……NOT $500k plus the cost of inflation for the years between 2001-2008.
Over long periods of time inflation matters.
Indexing to inflation accounts for distortions in nominal dollar terms. Any economist worth his/her salt accounts for inflation. (Schiff does, Shiller does).One could use prices, relative to incomes (as Rich does) to come up with perhaps a more relevant metric.
If one ignores inflation one might make the mistake of expecting prices to revert to where they were in 1965 when a SFR in Point Loma could be had for about $35K. After all the weather is not that much better now, is it ?
ParticipantHousing prices may or may NOT follow the percentage of inflation, even in a healthy market. There are many factors that cause housing to go up when times are good and inflation is only one of them. I’ve read quite a few posts since I started reading this board where many a poster automatically figures in inflation when trying to determine where a house should presently be priced. I’m not saying that they’re absolutely wrong…..it’s just my opinion that they are. If “X” house was selling for $500k in 2001 and housing returns to 2001 levels, my opinion is that “X” house will most likely return to a price of $500k……NOT $500k plus the cost of inflation for the years between 2001-2008.
Over long periods of time inflation matters.
Indexing to inflation accounts for distortions in nominal dollar terms. Any economist worth his/her salt accounts for inflation. (Schiff does, Shiller does).One could use prices, relative to incomes (as Rich does) to come up with perhaps a more relevant metric.
If one ignores inflation one might make the mistake of expecting prices to revert to where they were in 1965 when a SFR in Point Loma could be had for about $35K. After all the weather is not that much better now, is it ?
ParticipantMedium Price ? Pepsi ?
Submitted by pepsi on January 3, 2008 – 1:52pm.
Just some numbers for CV (signle family resell):
Medium price (2001 – 2006):
2001: $610K
2002: $670K
2003: $750K
2004: $969K
2005: $1.04M
2006: $1.028M
Medium Price for Nov, 2007: $875K (That is less than 5% annual appreciation from 2001 medium price)
ParticipantMedium Price ? Pepsi ?
Submitted by pepsi on January 3, 2008 – 1:52pm.
Just some numbers for CV (signle family resell):
Medium price (2001 – 2006):
2001: $610K
2002: $670K
2003: $750K
2004: $969K
2005: $1.04M
2006: $1.028M
Medium Price for Nov, 2007: $875K (That is less than 5% annual appreciation from 2001 medium price)
ParticipantMedium Price ? Pepsi ?
Submitted by pepsi on January 3, 2008 – 1:52pm.
Just some numbers for CV (signle family resell):
Medium price (2001 – 2006):
2001: $610K
2002: $670K
2003: $750K
2004: $969K
2005: $1.04M
2006: $1.028M
Medium Price for Nov, 2007: $875K (That is less than 5% annual appreciation from 2001 medium price)
ParticipantMedium Price ? Pepsi ?
Submitted by pepsi on January 3, 2008 – 1:52pm.
Just some numbers for CV (signle family resell):
Medium price (2001 – 2006):
2001: $610K
2002: $670K
2003: $750K
2004: $969K
2005: $1.04M
2006: $1.028M
Medium Price for Nov, 2007: $875K (That is less than 5% annual appreciation from 2001 medium price)
ParticipantMedium Price ? Pepsi ?
Submitted by pepsi on January 3, 2008 – 1:52pm.
Just some numbers for CV (signle family resell):
Medium price (2001 – 2006):
2001: $610K
2002: $670K
2003: $750K
2004: $969K
2005: $1.04M
2006: $1.028M
Medium Price for Nov, 2007: $875K (That is less than 5% annual appreciation from 2001 medium price)
ParticipantIt has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.
The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.
ParticipantIt has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.
The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.
ParticipantIt has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.
The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.
ParticipantIt has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.
The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.
ParticipantIt has worked well. We never come anywhere close to borrowing the max 28/36. We like to go out and have our fun on weekends, not sit with empty pockets watching reality TV at home.
The concept of a standard ratio for all categories is absurd. Someone making $50K probably cannot afford to spend 36% on debt service because their other essential living expenses are likely to be much higher a percentage of income compared to someone making 250K for example.
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