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SDEngineer
Participant[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.
Participant[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.
Participant[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.
Participant[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.
Participant[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.
Participant[quote=Rt.66]SDEngineer:
That chart is of questionable origins don’t you think? Its a bubble bloggers homemade chart from what I can see. Still, nationally it even shows Japans price run up was worse than ours.
Our RE bubble certainly includes land and also CR just like Japan’s bubble did. So if we could find a US chart that shows just land I’m guessing we’d have the a similar chart to the Economist’s chart.[/quote]
The bubble bloggers’ homemade charts were FAR more accurate than the MSM’s charts all throughout this bubble. They appear to be more indepth and accurate in this one as well.
The Economist used this chart to attempt to show that Japan’s runup in prices was MUCH lower than the U.S.’s, when in fact comparing similar indices showed a similar runup in prices nationwide between the U.S. and Japan in terms of housing prices, and a significantly LARGER bubble when compared to large bubble cities (like San Diego or Miami compared to Tokyo or Kyoto).
Our land, btw, had further to run up than Japans did – at the beginning of the bubble, land was CHEAP in most of the US. It was NOT cheap in Japan pre-bubble.
As the blogger noted as well, inflation was substantially higher here over the same runup period than it was in Japan, which also has an effect (ignored again by the Economist’s shallow analysis).
Participant[quote=Rt.66]SDEngineer:
That chart is of questionable origins don’t you think? Its a bubble bloggers homemade chart from what I can see. Still, nationally it even shows Japans price run up was worse than ours.
Our RE bubble certainly includes land and also CR just like Japan’s bubble did. So if we could find a US chart that shows just land I’m guessing we’d have the a similar chart to the Economist’s chart.[/quote]
The bubble bloggers’ homemade charts were FAR more accurate than the MSM’s charts all throughout this bubble. They appear to be more indepth and accurate in this one as well.
The Economist used this chart to attempt to show that Japan’s runup in prices was MUCH lower than the U.S.’s, when in fact comparing similar indices showed a similar runup in prices nationwide between the U.S. and Japan in terms of housing prices, and a significantly LARGER bubble when compared to large bubble cities (like San Diego or Miami compared to Tokyo or Kyoto).
Our land, btw, had further to run up than Japans did – at the beginning of the bubble, land was CHEAP in most of the US. It was NOT cheap in Japan pre-bubble.
As the blogger noted as well, inflation was substantially higher here over the same runup period than it was in Japan, which also has an effect (ignored again by the Economist’s shallow analysis).
Participant[quote=Rt.66]SDEngineer:
That chart is of questionable origins don’t you think? Its a bubble bloggers homemade chart from what I can see. Still, nationally it even shows Japans price run up was worse than ours.
Our RE bubble certainly includes land and also CR just like Japan’s bubble did. So if we could find a US chart that shows just land I’m guessing we’d have the a similar chart to the Economist’s chart.[/quote]
The bubble bloggers’ homemade charts were FAR more accurate than the MSM’s charts all throughout this bubble. They appear to be more indepth and accurate in this one as well.
The Economist used this chart to attempt to show that Japan’s runup in prices was MUCH lower than the U.S.’s, when in fact comparing similar indices showed a similar runup in prices nationwide between the U.S. and Japan in terms of housing prices, and a significantly LARGER bubble when compared to large bubble cities (like San Diego or Miami compared to Tokyo or Kyoto).
Our land, btw, had further to run up than Japans did – at the beginning of the bubble, land was CHEAP in most of the US. It was NOT cheap in Japan pre-bubble.
As the blogger noted as well, inflation was substantially higher here over the same runup period than it was in Japan, which also has an effect (ignored again by the Economist’s shallow analysis).
Participant[quote=Rt.66]SDEngineer:
That chart is of questionable origins don’t you think? Its a bubble bloggers homemade chart from what I can see. Still, nationally it even shows Japans price run up was worse than ours.
Our RE bubble certainly includes land and also CR just like Japan’s bubble did. So if we could find a US chart that shows just land I’m guessing we’d have the a similar chart to the Economist’s chart.[/quote]
The bubble bloggers’ homemade charts were FAR more accurate than the MSM’s charts all throughout this bubble. They appear to be more indepth and accurate in this one as well.
The Economist used this chart to attempt to show that Japan’s runup in prices was MUCH lower than the U.S.’s, when in fact comparing similar indices showed a similar runup in prices nationwide between the U.S. and Japan in terms of housing prices, and a significantly LARGER bubble when compared to large bubble cities (like San Diego or Miami compared to Tokyo or Kyoto).
Our land, btw, had further to run up than Japans did – at the beginning of the bubble, land was CHEAP in most of the US. It was NOT cheap in Japan pre-bubble.
As the blogger noted as well, inflation was substantially higher here over the same runup period than it was in Japan, which also has an effect (ignored again by the Economist’s shallow analysis).
Participant[quote=Rt.66]SDEngineer:
That chart is of questionable origins don’t you think? Its a bubble bloggers homemade chart from what I can see. Still, nationally it even shows Japans price run up was worse than ours.
Our RE bubble certainly includes land and also CR just like Japan’s bubble did. So if we could find a US chart that shows just land I’m guessing we’d have the a similar chart to the Economist’s chart.[/quote]
The bubble bloggers’ homemade charts were FAR more accurate than the MSM’s charts all throughout this bubble. They appear to be more indepth and accurate in this one as well.
The Economist used this chart to attempt to show that Japan’s runup in prices was MUCH lower than the U.S.’s, when in fact comparing similar indices showed a similar runup in prices nationwide between the U.S. and Japan in terms of housing prices, and a significantly LARGER bubble when compared to large bubble cities (like San Diego or Miami compared to Tokyo or Kyoto).
Our land, btw, had further to run up than Japans did – at the beginning of the bubble, land was CHEAP in most of the US. It was NOT cheap in Japan pre-bubble.
As the blogger noted as well, inflation was substantially higher here over the same runup period than it was in Japan, which also has an effect (ignored again by the Economist’s shallow analysis).
Participant[quote=Rt.66]”Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.[/quote]
The particular chart used by the Economist in this is misleading. They use US housing prices, but they compare against Japan’s LAND prices (and land prices in Japan were, due to it being rather in short supply there, already sky high before the bubble).
This set of charts gives a much better overview of exactly how high Japan’s HOUSING prices got at the peak:
Participant[quote=Rt.66]”Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.[/quote]
The particular chart used by the Economist in this is misleading. They use US housing prices, but they compare against Japan’s LAND prices (and land prices in Japan were, due to it being rather in short supply there, already sky high before the bubble).
This set of charts gives a much better overview of exactly how high Japan’s HOUSING prices got at the peak:
Participant[quote=Rt.66]”Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.[/quote]
The particular chart used by the Economist in this is misleading. They use US housing prices, but they compare against Japan’s LAND prices (and land prices in Japan were, due to it being rather in short supply there, already sky high before the bubble).
This set of charts gives a much better overview of exactly how high Japan’s HOUSING prices got at the peak:
Participant[quote=Rt.66]”Most dismiss the idea that America could suffer the same fate as Japan, but some of the differences are overstated. For example, some claim that Japan’s bubble was much bigger than America’s. Yet average house prices nationwide rose by 90% in America between 2000 and 2006, compared with a gain of 51% in Japan between 1985 and early 1991, when Japanese home prices peaked.”
http://www.economist.com/finance/displayStory.cfm?story_id=11964819
From a housing price stand piont, WE are in MUCH worse shape than Japan was.[/quote]
The particular chart used by the Economist in this is misleading. They use US housing prices, but they compare against Japan’s LAND prices (and land prices in Japan were, due to it being rather in short supply there, already sky high before the bubble).
This set of charts gives a much better overview of exactly how high Japan’s HOUSING prices got at the peak:
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