R.W.E. of the J.B.O. wrote:
Take Back the Republican Party wrote:If you look at it closely, the upward slop that began after the flatline from the late 80's to the mid 90's is steeper than the rest of the slopes. It gained speed around 2000, but most importantly, if you look at the housing price index vs. the consumer price index, inflation, or owner-equivalent rent, you will see that is in the 90's when the housing price index broke away from everything else. I'll try to dig up the databases with all of these in it, and show you what I mean (I had them once before, but due to a hard drive crash, some of the info I had was lost). All of these indices tend to stick relatively close together, up until the 90's. Because housing values actually dipped below the line for a few years, it could be argued that for a few years of the 90's it was still following a normal trend, but the slope started there and didn't stop until the crash.
Actually, in that chart Notec posted, I don't see a bubble "starting in the early-mid 90's." Not unless you consider the reasonable yearly appreciation from 1963 to 1988 shown to also be a "bubble", which it most certainly was not. Note that both slopes are similar (up until 2002 anyway), and the only discerning feature is that the average price of a home sold in the years 1988-1994 rather held steady (flatlined). If one takes away this flatline section, and studies just the slope, one can see that the rate of "value gain" started to be practically vertical in 2002 and up. This was the bubble, and THIS is when obscene profit-taking begain.
Take Back the Republican Party wrote:This makes sense, although it's not necessarily the case in all areas. I know as you head south, there was certainly far more of that going on, but in the Northeast, not so much. In my area, for example, over the past 8 years that I've lived here, I've seen more 1,000 sq ft single floor homes being built in various developments, and they were selling for $150-200K on a half acre of land. When you get down into MA, it's the same, except right around Boston, where people have been buying postage-stamp sized lots and building 3,000 sq ft houses on it. This is, of course, due to the money concentration in that area.
It's also important we all keep in mind that the average home value figure is also affected by a host of other factors, not just appreciation of existing home values. Over the past decades, average square footage of houses increased rapidly, as did features, thus also driving the average price upward. I'd think a more accurate snapshot of what we're discussing here (equity appreciation and the hit it took from the bubble) would be sales/values of existing homes, not just ALL homes.
OHV notec wrote:Yes, this is a very good index, because it throws out the new construction, and gives a much better picture of what's happening with prices. As you can see, the curve began prior to 2000. It was accelerating, but it didn't start as late as some believe. I found a few charts which compare the Case-Shiller index to other market indicators, and you can see what I was talking about before, where housing prices began to break away from everything else over a decade ago:
I tried posting this Friday, but Google ads on JBO were making my browser flip out...It doesn't measure every market, but the sample size seems to be pretty impressive. It takes out many variables by only factoring in the sale value of the same home when resold.