I saw a similar chart showing a similar trend in the stock market. We’ve had a trend for nearly 100 years, why would anyone think that suddenly that trend is going to just stop and prices are going to be infinitely upward. The good news is that both the housing and the stock market, by simple graphs anyway, appear to be approaching more “historic” levels.
So in short anyone who invested or bought a house at the “high” prices of the last 10-15 years is likely SOL for quite some time unless we decide to artificially subsidize everything again.
Historically speaking, has been the average ratio of house prices to personal income? I remember seeing this not to long ago and thinking to myself, “wow its rreally high now.”
this guy saw it coming. i saw an interview with him a month or so ago, in the article he declines to mention whom he went and pitched his spiel to that things were going to collapse and they blew him off. if i remember the interview correctly the company was bear stearns. he showed them his numbers, they said they have analyst that all they do is calculate these thing and to have a good day. on the way out of the presentation the dude from bear stearns says, ‘‘God i hope you’re wrong.’’ nope.
The graphs are cool, but the last two paragraphs are:
“And most importantly, as anyone who has read a newspaper or gone to a party knows, it has become a widely accepted fact both in the media and among the Southern California populace that real estate A) never goes down and B) is the place to be if you want to get wealthy. This entrenched expectation of huge, risk-free equity gains has become priced into the housing market.
Home prices have been driven to current levels not by fundamentals, but by ubiquitous optimism, a complete lack of risk avoidance, a staggering amount of debt accrual, low lending standards, an enormous increase in market participation, widespread misconceptions about what drives home prices, and an utter dependency on continued price gains. Southern California is experiencing a classic speculative bubble.”
This guy was pummeled by just about everyone for writing this at the time. He was labelled a malcontent and doomsayer.
But he was right on. He used data and science instead of emotion and ideology. Go figure.
Well A LOT of people saw it coming in fact a lot of “Laymen” here on this forum saw it coming. What is sad is that it’s SO glaringly obvious, yet no one did anything.
Same thing with the stock market although I was not looking back to as early as 1993 or so. I actually had “Alarms” going off all over the place in 2001 when that was just about to crash and was told by my “Adviser” “oh don’t worry about it”. My mistake
Things typically follow a relatively “Reasonable” path. You can’t have 10,15+% growth year over year, it’s simply not sustainable. We saw that in housing and we saw that in the stock market to a point.
My point is why would ANY “Expert” think that it was?
