Long Term Housing Prices

[Glenn Black]

http://www.abc.net.au/news/stories/2...28/2148237.htm

http://www.nytimes.com/2006/03/05/ma...pagewanted=all

http://www.debtdeflation.com/blogs/

http://www.netspar.nl/events/pension...oltzoutput.pdf

Conclusions:

• Houses go up 0.2%/yr in inflation adjusted currency over the long term. This is close enough to zero to be created by rounding error and random fluctuation. Therefore housing matches inflation in the long term.

• At least you can live in your wealth storage system (investment), but watch out for the anomalies and fluctuations in the short term, they can kill 'ya.

Shiller used this case study in his book "Irrational Exuberance".

Three links on the long term pricing of constant real estate (1625 - 2002), show in the very best of cases, your real estate may stay always in demand locally (location, location, location), but suffering the fate of disease, war, trade, and sundowning (best in that city, but no longer the hot, sexy, hip place to live of all available cities).

Basically, real estate fluctuates much more than rental rates when instability (eg. wars) occur, as you're stuck in your investment. In good times, you can triple your money in a few years, in bad times, you lose equally horrifically.

Is there any hope to keep inflated house prices afloat?

History says no.

[nero3]

Re: Long Term Housing Prices

http://www.abc.net.au/news/stories/2...28/2148237.htm

http://www.nytimes.com/2006/03/05/ma...pagewanted=all

http://www.debtdeflation.com/blogs/

http://www.netspar.nl/events/pension...oltzoutput.pdf

Conclusions:

• Houses go up 0.2%/yr in inflation adjusted currency over the long term. This is close enough to zero to be created by rounding error and random fluctuation. Therefore housing matches inflation in the long term.

• At least you can live in your wealth storage system (investment), but watch out for the anomalies and fluctuations in the short term, they can kill 'ya.

Shiller used this case study in his book "Irrational Exuberance".

Three links on the long term pricing of constant real estate (1625 - 2002), show in the very best of cases, your real estate may stay always in demand locally (location, location, location), but suffering the fate of disease, war, trade, and sundowning (best in that city, but no longer the hot, sexy, hip place to live of all available cities).

Basically, real estate fluctuates much more than rental rates when instability (eg. wars) occur, as you're stuck in your investment. In good times, you can triple your money in a few years, in bad times, you lose equally horrifically.

Is there any hope to keep inflated house prices afloat?

History says no.

I think you have to ask a question if the CPI, starting from around 1982, then further after clinton took charge with the hedonistic adjustments still is a good tool. Most professors like krugman or shiller seems to think it is, but they would not know a hammer from a screw driver, so I am really not sure.