[SDEngineer]

JP:

I certainly wasn’t trying to question the Case-Shiller numbers, they’re one of the tools I’ve been using to attempt to figure the market out. They certainly do indicate the higher value areas were in a BIG bubble – just not nearly as much of a bubble as the lower value areas.

Rich Toscano’s charts which he posts here are very eye-opening. See here:

January Case-Shiller HPI

for one of his recent posts after the release of the January Case-Shiller numbers (bear in mind, we’ve seen another 3 months of depreciation since then). You can see that the high areas never got quite as overvalued as the lower areas, and haven’t fallen nearly as much from peak as them at this point – but there’s no indication that they won’t fall, just that they didn’t have as far to fall to begin with, and presumably had less subprimes to worry about along with owners with greater personal means to postpone financial problems. You’ll note that according to Rich’s charts, the low end areas have experienced the brunt of the depreciation so far, but the high and mid areas are still overpriced and will presumably revert to medians soon – and now all three groupings have roughly as far to fall to return to parity.

BTW, I think “normal” appreciation over a 8 year period would be somewhere around 30-40%. Housing generally tracks real inflation pretty accurately (though our recent inflation numbers are badly understated as a result of changes to the calculations they made in the late 90’s which have resulted in essentially ignoring a lot of energy and food inflation).

[SDEngineer]

Agree. I’ve done several back-of-the-napkin calculations using several different measurements (household income to historical house price ratio, FMV rent to house price ratio, and wage inflation applied as house price inflation over the past decade or so), and they all tend to wind up in the 300k-330k region for what a normal trendline median price should be today. That matches very well with what a lot of the housing bears were saying at the peak of the market in ’05 when the bears arguing for a return to trend said the market had to lose about 40% of its value to return to normal. We’ve only seen about 25% of that value lost – less in the more desireable areas (though according to the Case-Shiller index they were less inflated anyway, so the drop will be less severe overall with them).

[SDEngineer]

Agree. I’ve done several back-of-the-napkin calculations using several different measurements (household income to historical house price ratio, FMV rent to house price ratio, and wage inflation applied as house price inflation over the past decade or so), and they all tend to wind up in the 300k-330k region for what a normal trendline median price should be today. That matches very well with what a lot of the housing bears were saying at the peak of the market in ’05 when the bears arguing for a return to trend said the market had to lose about 40% of its value to return to normal. We’ve only seen about 25% of that value lost – less in the more desireable areas (though according to the Case-Shiller index they were less inflated anyway, so the drop will be less severe overall with them).

[SDEngineer]

Agree. I’ve done several back-of-the-napkin calculations using several different measurements (household income to historical house price ratio, FMV rent to house price ratio, and wage inflation applied as house price inflation over the past decade or so), and they all tend to wind up in the 300k-330k region for what a normal trendline median price should be today. That matches very well with what a lot of the housing bears were saying at the peak of the market in ’05 when the bears arguing for a return to trend said the market had to lose about 40% of its value to return to normal. We’ve only seen about 25% of that value lost – less in the more desireable areas (though according to the Case-Shiller index they were less inflated anyway, so the drop will be less severe overall with them).

[SDEngineer]

Agree. I’ve done several back-of-the-napkin calculations using several different measurements (household income to historical house price ratio, FMV rent to house price ratio, and wage inflation applied as house price inflation over the past decade or so), and they all tend to wind up in the 300k-330k region for what a normal trendline median price should be today. That matches very well with what a lot of the housing bears were saying at the peak of the market in ’05 when the bears arguing for a return to trend said the market had to lose about 40% of its value to return to normal. We’ve only seen about 25% of that value lost – less in the more desireable areas (though according to the Case-Shiller index they were less inflated anyway, so the drop will be less severe overall with them).

[SDEngineer]

Agree. I’ve done several back-of-the-napkin calculations using several different measurements (household income to historical house price ratio, FMV rent to house price ratio, and wage inflation applied as house price inflation over the past decade or so), and they all tend to wind up in the 300k-330k region for what a normal trendline median price should be today. That matches very well with what a lot of the housing bears were saying at the peak of the market in ’05 when the bears arguing for a return to trend said the market had to lose about 40% of its value to return to normal. We’ve only seen about 25% of that value lost – less in the more desireable areas (though according to the Case-Shiller index they were less inflated anyway, so the drop will be less severe overall with them).

[SDEngineer]

Ah, the link to the Money magazine article was to a poll. It wasn’t a ranking of cities, but a selection screen for ranking them.

While I don’t place a whole lot of faith in polls, if you’ll click the “Show Results” tab on the poll, San Diego is currently ranked #1.

San Diego median household income is ~67K (I believe that was the 2006 figure, so may be a little higher now, I’ve seen 72K thrown around before for a more recent figure). However, So Cal in general is (and always has been) highly concentrated with permanent renters – San Diego, LA, and other coastal cities here have always had a premium to buy (though not nearly as bad as the recent bubble). SD/LA is basically 50/50 renter/owner households. If you back the median renter household income (~43K) out of the median household income, San Diego has a median homeowners household income of just about 95K/yr. Just a few more data points, but it does support a somewhat higher home valuation than, for example, a midwest city with a 66/33 homeowner/renter median.

[SDEngineer]

Ah, the link to the Money magazine article was to a poll. It wasn’t a ranking of cities, but a selection screen for ranking them.

While I don’t place a whole lot of faith in polls, if you’ll click the “Show Results” tab on the poll, San Diego is currently ranked #1.

San Diego median household income is ~67K (I believe that was the 2006 figure, so may be a little higher now, I’ve seen 72K thrown around before for a more recent figure). However, So Cal in general is (and always has been) highly concentrated with permanent renters – San Diego, LA, and other coastal cities here have always had a premium to buy (though not nearly as bad as the recent bubble). SD/LA is basically 50/50 renter/owner households. If you back the median renter household income (~43K) out of the median household income, San Diego has a median homeowners household income of just about 95K/yr. Just a few more data points, but it does support a somewhat higher home valuation than, for example, a midwest city with a 66/33 homeowner/renter median.

[SDEngineer]

Ah, the link to the Money magazine article was to a poll. It wasn’t a ranking of cities, but a selection screen for ranking them.

While I don’t place a whole lot of faith in polls, if you’ll click the “Show Results” tab on the poll, San Diego is currently ranked #1.

San Diego median household income is ~67K (I believe that was the 2006 figure, so may be a little higher now, I’ve seen 72K thrown around before for a more recent figure). However, So Cal in general is (and always has been) highly concentrated with permanent renters – San Diego, LA, and other coastal cities here have always had a premium to buy (though not nearly as bad as the recent bubble). SD/LA is basically 50/50 renter/owner households. If you back the median renter household income (~43K) out of the median household income, San Diego has a median homeowners household income of just about 95K/yr. Just a few more data points, but it does support a somewhat higher home valuation than, for example, a midwest city with a 66/33 homeowner/renter median.

[SDEngineer]

Ah, the link to the Money magazine article was to a poll. It wasn’t a ranking of cities, but a selection screen for ranking them.

While I don’t place a whole lot of faith in polls, if you’ll click the “Show Results” tab on the poll, San Diego is currently ranked #1.

San Diego median household income is ~67K (I believe that was the 2006 figure, so may be a little higher now, I’ve seen 72K thrown around before for a more recent figure). However, So Cal in general is (and always has been) highly concentrated with permanent renters – San Diego, LA, and other coastal cities here have always had a premium to buy (though not nearly as bad as the recent bubble). SD/LA is basically 50/50 renter/owner households. If you back the median renter household income (~43K) out of the median household income, San Diego has a median homeowners household income of just about 95K/yr. Just a few more data points, but it does support a somewhat higher home valuation than, for example, a midwest city with a 66/33 homeowner/renter median.

[SDEngineer]

Ah, the link to the Money magazine article was to a poll. It wasn’t a ranking of cities, but a selection screen for ranking them.

While I don’t place a whole lot of faith in polls, if you’ll click the “Show Results” tab on the poll, San Diego is currently ranked #1.

San Diego median household income is ~67K (I believe that was the 2006 figure, so may be a little higher now, I’ve seen 72K thrown around before for a more recent figure). However, So Cal in general is (and always has been) highly concentrated with permanent renters – San Diego, LA, and other coastal cities here have always had a premium to buy (though not nearly as bad as the recent bubble). SD/LA is basically 50/50 renter/owner households. If you back the median renter household income (~43K) out of the median household income, San Diego has a median homeowners household income of just about 95K/yr. Just a few more data points, but it does support a somewhat higher home valuation than, for example, a midwest city with a 66/33 homeowner/renter median.

[SDEngineer]

You can absolutely make biofuels out of wood. The problem is renewing that source. Trees grow slowly. Corn grows really fast.

[SDEngineer]

You can absolutely make biofuels out of wood. The problem is renewing that source. Trees grow slowly. Corn grows really fast.

[SDEngineer]

You can absolutely make biofuels out of wood. The problem is renewing that source. Trees grow slowly. Corn grows really fast.

[SDEngineer]

You can absolutely make biofuels out of wood. The problem is renewing that source. Trees grow slowly. Corn grows really fast.

[Author]

Posts