Mark Perry has a nice post detailing the May CoreLogic report on housing prices. It's very similar to what the Radar Logic series is showing: over the past year, the decline in housing prices appears to have come to a halt. CoreLogic actually shows prices increasing 2% in the year ended last May. I've created the two charts above, which cover data going back to 1976, to provide some long-term perspective. I note, for example, that prices today are about 30% below their 2005 high, but still 540% above their 1976 low. That represents an annualized gain in real terms since 1976 of about 1.2% for the typical home, and that does not seem out of line given the larger size and more feature-laden homes of today.
1.2% real over 36 years is a 54% increase in absolute real terms. Not saying it isn't justified (or perhaps homes were overly inexpensive back in 1976), but that figure means the size / features need to be much larger / improved if that's the only reason.
ReplyDeleteDon't overlook the fact that real incomes have increased by much more than 1.2% since 1976. Housing is much more affordable today than ever.
ReplyDeleteYup... real per capital personal disposable income up 1.75% / annualized since 1976
ReplyDeleteI bought a nice 10 year old ranch-style house in mid Memphis in 1976 for $85,000. 540% increase would make a comparable home: $459,000 today.
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