Sign in     Like us on Facebook Follow us on Twitter Watch us on YouTube

News and Blog

Join 5000 other sharemarket traders for regular blog updates!

Browse to a category

Blog Search

I Love a Good Chart

This is from Chart of the Day who occasionally produce some interesting charts – although most of the time they are obscure things such as measuring GDP in gherkins The chart below is the  long term inflation adjusted median price of US housing.

Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased — increased. That brings us to today’s chart which illustrates how the inflation-adjusted median home price is currently 38% off its 2005 peak. That’s a $100,000 drop. In fact, a home buyer who bought the median priced single-family home at the 1979 peak has actually seen that home lose value (8.5% loss). Not an impressive performance considering that more than three decades have passed. It is worth noting that the median priced home is currently in the bottom half of a price range that existed from the late 1970s into the mid-1990s.

I find this interesting not only because of my interest in the nature of bubbles and there persistence but also the nature of delusional behaviour. As an example the past few years have seen large numbers of real estate spruikers taking groups of investors to the US to buy depressed housing stock which from where I sit is a suicidal move.  Leave aside the nature of urban blight and the collapse of US heavy manufacturing which is exacerbating the collapse, the currency fluctuation alone has wiped these investors out. Assuming no further change in the value of the value of junk the doubling of the currency has effectively halved the value of your investment and any yield it generated.

email

Speak Your Mind

*

General Advice Warning

The Trading Game Pty Ltd (ACN: 099 576 253) is an AFSL holder (Licence no: 468163). This information is correct at the time of publishing and may not be reproduced without formal permission. It is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs.

email