Real Estate always goes up eh?

[GRG55]

Wonder if California or Florida will follow this pattern? Seems a long time to wait to get your money back...

Amsterdam Real Estate Near High Point of 1736

November 15, 2007

My ancestors, the Dutch, were ahead of the curve when it comes to financial innovations such trading in financial securities. But, they also experienced bubbles such as the famous tulip bulb bubble. There was also a real estate bubble in Amsterdam, on the famous canal, the Herengracht.

Justin Fox at Time’s Curious Capitalist Blog posted on an article he translated from a Dutch newspaper [emphasis added]:
House Prices on Amsterdam’s Herengracht Have Almost Returned To Their 1736 Highs (Curious Capitalist Blog, November 14, 2007, Justin Fox)

I missed this when it came out, but the NRC Handelsblad had a piece Saturday on the latest data from University of Maastricht professor Piet Eichholtz’s famous index of house prices along the Herengracht in Amsterdam dating back to 1650 (translation mine):

The average house on the Herengracht now costs 2.6 million euros. That is, on an inflation-adjusted basis, just a bit less than in 1736, when house prices along the Herengracht were at their historical high. If house prices keep rising at their current tempo, the 271-year-old record will be tied in 2008…’

Eichholtz’s index is a favorite of Yale economist Bob Shiller, who sees it as evidence that real estate prices don’t always go up, and can in fact decline for centuries on end.

There's a price chart related to the article here:
http://www.fundmasteryblog.com/2007/...int-from-1736/

[Rajiv]

Re: Real Estate always goes up eh?

See also "Tulip mania"

In 1623, a single bulb of a famous tulip variety could cost as much as a thousand Dutch florins (the average yearly income at the time was 150 florins). Tulips were also exchanged for land, valuable livestock, and houses. Allegedly, a good trader could earn six thousand florins a month.

By 1635, a sale of 40 bulbs for 100,000 florins was recorded. By way of comparison, a ton of butter cost around 100 florins and "eight fat swine" 240 florins. A record was the sale of the most famous bulb, the Semper Augustus, for 6,000 florins in Haarlem.

By 1636, tulips were traded on the stock exchanges of numerous Dutch towns and cities. This encouraged trading in tulips by all members of society, with many people selling or trading their other possessions in order to speculate in the tulip market. Some speculators made large profits as a result. Others lost all or even more than they had.