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If home prices only increased at the rate of inflation over time, Beverly Hills would be the same price as Barstow. San Francisco would be the same price as Stockton. How do you explain the difference?
what are you comparing ... the same 1950s shack in Beverly Hills to todays resale value... well yes.. (explain why prices fell by 50% in BH back in early 90s. and later in recent years)
or are you comparing 800 shack in BH to a 8000 sq ft mansion down the road ?
Are you really not getting this?
Here is another example:
Lets compare a shack as you call it from 1950 in Barstow to the same 1950 shack in Santa Monica. How come they are priced differently? Should just stay on the inflation curve right? Should be the same price then.
Or...how come a house that was $20k in Malibu 1970 is now 2Million when that same house in Studio City is only 800k. Why? They should also be the same price according to your theories.
These are really just rhetorical questions...
Lets compare a shack as you call it from 1950 in Barstow to the same 1950 shack in Santa Monica. How come they are priced differently? Should just stay on the inflation curve right? Should be the same price then.
As Robert Shiller pointed out.. you need to compare apples to apples..the resale price of a single home over the decades... you can talk of one.. Barstow or Santa Monica.. not both....
And yes, for many homes in the USA, its already been proven real estate price will be the same over the long run from 1950 to today...
else no point to talk to someone who is living in ga ga land !
As Robert Shiller pointed out.. you need to compare apples to apples..the resale price of a single home over the decades... you can talk of one.. Barstow or Santa Monica.. not both....
Ok, then lets use the example of a Malibu 1950's home. How come it has gained much much more in value than the home in Barstow? I am not comparing the 2 I am asking you to explain why one home in location A gains 1000% in price and another similar house only 300%. How is that explained when you show a curve with a green line and tell me that all houses will end up at the green line level??? Do you not see the fault in that ?
I actually think you are the one living in a made up reality.
Ok, then lets use the example of a Malibu 1950's home. How come it has gained much much more in value than the home in Barstow? I am not comparing the 2 I am asking you to explain why one home in location A gains 1000% in price and another similar house only 300%. How is that explained when you show a curve with a green line and tell me that all houses will end up at the green line level??? Do you not see the fault in that ?
I actually think you are the one living in a made up reality.
NO ! you explain why Robert Shillers findings are all wrong...
You are out of your mind in believing 300% is typical appreciation...
at best we saw 100% appreciation over a highly inflationary period with economic boom
job growth and incomes from 1980 to 1985...
Bigsby
2013 Dec 30, 10:34am
NO ! you explain why Robert Shillers findings are all wrong...
You said many but not all places in the USA. And a lot of things have changed in the world economy (and population) in recent decades.
NO ! you explain why Robert Shillers findings are all wrong...
That's easy - according to him my house should have gone down in value but instead it has gone up :)
Also...more detailed description is here: http://themortgagereports.com/13424/flawed-case-shiller-index-shows-home-values-rising-nationwide-up-12-1-annually
Now your turn...please explain my question from the last post. You are backing out. You are the one posting graphs. So then explain why a Malibu home has gained much more percentage in the same time period than a Barstow home if all homes should follow the inflation line. Come on...I would like to hear YOUR explanation for it.
That's easy - according to him my house should have gone down in value but instead it has gone up :)
We are not in a rational market... hardly.. even Shiller will point out the Market
is driven by Govt policies over 90% of housing.
So no! your numbers are unrealistic.
So no! your numbers are unrealistic.
My numbers are the reality as they ARE the actual price on the street. Yours are unrealistic and exist only in a you tube video.
Strategist
2013 Dec 30, 10:44am
That's easy - according to him my house should have gone down in value but instead it has gone up :)
We are not in a rational market... hardly.. even Shiller will point out the Market
is driven by Govt policies over 90% of housing.
So no! your numbers are unrealistic.
So according to you the house suboink purchased should be similarly priced to a similar house in Barstow because home prices can only go up with the rate of inflation. Local demand and supply conditions have absolutely no impact and no meaning. The high land prices in San Francisco compared to Stockton are a mirage.
So according to you the house suboink purchased should be similarly priced to a similar house in Barstow because home prices can only go up with the rate of inflation.
did I say that ? No... you need to read up again...
My numbers are the reality as they ARE the actual price on the street. Yours are unrealistic and exist only in a you tube video.
LOL! oh blame a You tube video... so your disputing Robert Shillers research on
Home prices over the long run ? is that what you want to debate...
Im sure there are lots of Realtors who dispute with Shillers numbers.
As Robert Shiller pointed out.. you need to compare apples to apples..the resale price of a single home over the decades... you can talk of one.. Barstow or Santa Monica.. not both....
Ok, then lets use the example of a Malibu 1950's home. How come it has gained much much more in value than the home in Barstow? I am not comparing the 2 I am asking you to explain why one home in location A gains 1000% in price and another similar house only 300%. How is that explained when you show a curve with a green line and tell me that all houses will end up at the green line level??? Do you not see the fault in that ?
I actually think you are the one living in a made up reality.
Is it really that complex?
Houses don't increase in value, the land they are built atop, that comprises the piece of Real Estate, goes up in price. Partly because population grows while available land remains constant. Partly because we price things in USDollars, which are constantly being diluted
Home prices over the long run ? is that what you want to debate...
You have still not answered my question. Typical.
So according to you the house suboink purchased should be similarly priced to a similar house in Barstow because home prices can only go up with the rate of inflation.
did I say that ? No... you need to read up again...
Of course you have said that. Posting a graph in conjunction with telling somebody NOT to buy means your graph should apply to my situation. Otherwise, why post it? I don't care about prices in Florida, I live in CA.
The high land prices in San Francisco compared to Stockton are a mirage.
under what pricing ... is that during typical bubble years and irrational exuberance ? Perhaps comparing price differences between Marin and Stockton would have been wiser.
http://www.nytimes.com/1997/04/27/realestate/live-work-law-for-artists-roils-san-franciscans.html
A report released this month by the National Association of Home Builders put San Francisco's median residential price for 1996 at $285,000. With prices beginning at $175,000 to $200,000, lofts are the cheapest nonsubsidized units on the market, according to David Becker, a broker with Ritchie Commercial Real Estate. They are, nonetheless, still too expensive for the artists for whom they were intended, Ms. Hestor said.
Of course you have said that. Posting a graph in conjunction with telling somebody NOT to buy means your graph should apply to my situation. Otherwise, why post it? I don't care about prices in Florida, I live in CA.
no... i posted Miami to show prices went down.
and I said... it was a good time to buy in Miami..
But what was true in Miami isnt true YET in SFBA.
You have still not answered my question. Typical.
Am i going to argue/debate with a scum realtor...
who cant even say the name of Robert Shiller,
a well respected economist who predicted and written excellent books
covering Stock and Housing Bubbles....
And you want to debate on PNet Shillers conclusion....
Go ahead debate ? we are all interested in hearing what Realtors want to say ...
And you want to debate on PNet Shillers conclusion....
No, I was asking YOU a question which you still haven't answered and explained. And then you call me a realtor?? Bizarre.
No, I was asking YOU a question which you still haven't answered and explained. And then you call me a realtor?? Bizarre.
pick it up at Amazon... knock yourself out !
http://www.amazon.com/Irrational-Exuberance-Robert-J-Shiller/dp/0767923634
Thanks!! I love science fiction!!
Exactly the comments a Realtor would say... they cannot even mutter
the name of " Robert Shiller " and totally dismiss his writings... TABOO!
I guess every buyer should bring a copy during a Open House....
I sure like to see the reaction on their face ... what a novel idea !!!
see you around Johnny Boy!
Suboink says
I think people that post here don't think its just "fun" - its actually very serious matter what happens to your financial future. When I first showed up here I was destroyed by the rising housing market. My wife and I both just couldn't believe what was happening. A house would come on the market. Same day you check it out, people are writing offers on the hood of their realtors car hood...always over asking price. We thought we were the only ones that thought it was stupid. I came here and found others that felt the same and somehow it made me feel a little better. There was little fun involved. Mostly frustration and anger.
Odd, you admit that when you were on the outside looking in of political privilege, you were "destroyed". Now that you are on team FUCK YOU, you seem to be taking joy and gloating at the destruction of others,,,,,
Exactly the comments a Realtor would say... they cannot even mutter
the name of " Robert Shiller " and totally dismiss his writings... TABOO!
I ask you a question and you throw out a you tube video...
I ask you a question again and you call me a realtor...still no dialog about what I asked.
I ask you a question again and you throw out a book I should read...
I am not dismissing anything except the nonsense you post which you can't even explain yourself.
Every time somebody calls you on it you cop out by posting yet another link for shiller. If you have studied him so much why can't you answer a simple question like the one I posted above??
Shiller is ashamed of you.
Now that you are on team FUCK YOU, you seem to be taking joy and gloating at the destruction of others,,,,,
So when I finally worked my way up to buying a house I joined some team called "fuck you" ?? O-kay.
Why can I not be happy and share that? When I was down about the markets it never bothered me hearing somebody else's success story. It motivated me. And that's the intend of any positive message.
I am gloating at the destruction of others??? Where do you read that?
I am not dismissing anything except the nonsense you post which you can't even explain yourself.
what nonsense is that... your in LA it should by now be obvious even LA goes down to long term mean... which you completely dismiss. OK.. so a video by Shiller's work should answer your questions.
i suggest you snap out of it and deal with reality of home ownership.. just like I have for the past 20+ years... Over your lifetime your home will appreciate at rate of inflation... thats all.. Get over it..
You want more ? you want more bubbles prices that will put the next buyer and economy at risk ?
Every time somebody calls you on it you cop out by posting yet another link for shiller. If you have studied him so much why can't you answer a simple question like the one I posted above??
The most honest work out there regarding RE and Housing... if your a buyer You need to read yourself.
I am gloating at the destruction of others??? Where do you read that?
you dismiss home prices never correct to long term mean...which they do!
Bigsby
2013 Dec 30, 1:34pm
I am gloating at the destruction of others??? Where do you read that?
you dismiss home prices never correct to long term mean...which they do!
What's the long-term mean for San Francisco, LA, NY, London, Paris, Hong Kong...? Do you expect they'll all revert back to those numbers despite population growth and all the changes to the world economy over the past couple of decades?
What's the long-term mean for San Francisco, LA, NY, London, Paris, Hong Kong...? Do you expect they'll all revert back to those numbers despite population growth and all the changes to the world economy over the past couple of decades?
... you missed Germany and Japan on your list above!
I just know you werent born yesterday.. and you know better by now
what the answer is to your question.
you dismiss home prices never correct to long term mean...which they do!
oh yeah!!
Detroit, MI--> GREAT BUY!!! It's going to revert to 1950s prices + inflation, no doubt. Don't mind that it's lost more than 50% of the population, the graph never lies.
There's nothing like investing based on a graph.
Detroit, MI--> GREAT BUY!!!
yes, why would anyone want to overpay in Detroit or Chicago, Milwaukee, Minneapolis or other MidWest city/town. after all the realtors keep saying
buy here, prices never go down... never trust what a historical graph tells
you.. you have realtors to help you out...
Bigsby
2013 Dec 30, 1:51pm
... you missed Germany and Japan on your list above!
I just know you werent born yesterday.. and you know better by now
what the answer is to your question.
Am I supposed to list every city on the planet? The point is that every place is different and that your generalizations offer no particular insight for a person buying in a given area. Pick one example from the list - let's say London. That's a city that has seen an enormous run up in prices that were barely affected by the recession. What are the long-term means for that city? When do you expect it to return to them? Maybe just maybe some places won't return to any supposed long-term mean simply because not all things stay equal.
Prices in the bay area and London might continue to rise for decades and then both may disappear off the map from rising sea levels. There simply doesn't have to be a reversion to mean in that picture.
let's say London. That's a city that has seen an enormous run up in prices that were barely affected by the recession. What are the long-term means for that city? When do you expect it to return to them? Maybe just maybe some places won't return to any supposed long-term mean simply because not all things stay equal............Prices in the bay area and London might continue to rise for decades and then both may disappear off the map from rising sea levels. There simply doesn't have to be a reversion to mean in that picture.
History says otherwise.... even for SF and London
Mean reversion awaits London property
http://www.ft.com/intl/cms/s/0/be2ba05e-f8e0-11e1-b4ba-00144feabdc0.html#axzz2p1tCcBTU
Reversion to the mean is one of the most reliable concepts in finance. Paradigm shifts are rare. Usually when prices move out of kilter with their long-term trend, they eventually revert to their mean.
The concept has limits in an era when the response to the crisis has left short-term rates at unprecedented lows. But it would be dangerous to ignore it. Those surfing the rise of London home prices, in particular, should take note.
During the bubble of the late 1980s, London prices topped out at 5.8 times average earnings, according to Nationwide, after which they savagely reverted to the mean and beyond, bottoming out at 2.6 times.
On the eve of the credit crunch, this multiple hit an even more ridiculous 7.2 times, but the subsequent correction only ever brought it as low as 5.4 times earnings – roughly the 1988 peak – before it started growing again
Am I supposed to list every city on the planet?
its always the same people who dismiss Germany and Japan
because they didnt have a run up in recent years... they already
had their bubble in the 80s and 90s... so no bubble for them !
Bigsby
2013 Dec 30, 2:20pm
Am I supposed to list every city on the planet?
its always the same people who dismiss Germany and Japan
because they didnt have a run up in recent years... they already
had their bubble in the 80s and 90s... so no bubble for them !
Do you even know the cost of real estate in a city like Tokyo or the surrounding areas come to that? It's still hugely expensive despite the fact the prices crashed from the bubble highs. What exaclty do you think 'revert to mean' amounts to there? People also seem to like to make the point that prices have flat-lined there for years, but prices for many things in Japan are still little different to what they were when I was living in Tokyo in the mid-90s.
Bigsby
2013 Dec 30, 2:38pm
The concept has limits in an era when the response to the crisis has left short-term rates at unprecedented lows. But it would be dangerous to ignore it. Those surfing the rise of London home prices, in particular, should take note.
During the bubble of the late 1980s, London prices topped out at 5.8 times average earnings, according to Nationwide, after which they savagely reverted to the mean and beyond, bottoming out at 2.6 times.
And what are they know? You're going to have a long wait if you expect them to fall back to 2.6 times average earnings. Like I said, the world is an entirely different place to what it was even in the 80s.
And what are they know? You're going to have a long wait if you expect them to fall back to 2.6 times average earnings. Like I said, the world is an entirely different place to what it was even in the 80s.
I am way too old to be fooled by that nonsense... you sound like an echo of the 2002-2008 US housing bubble... I really mean that... better yet could even pass
as the Silicon Valley Tech bubble of late 90s...
"the world is entirely different place".
LOL! who are you BS'ing..
Do you even know the cost of real estate in a city like Tokyo or the surrounding areas come to that? It's still hugely expensive despite the fact the prices crashed from the bubble highs. What exaclty do you think 'revert to mean' amounts to there? People also seem to like to make the point that prices have flat-lined there for years, but prices for many things in Japan are still little different to what they were when I was living in Tokyo in the mid-90s.
it went back to normal... Tokyo grew from 1945 to be capital of 2nd largest economy overshot and peaked by 1990 and prices still went down... to normal... market equilibrium.
the market found a balance... as did Germany after unification..
Bigsby
2013 Dec 30, 2:59pm
it went back to normal... Tokyo grew from 1945 to be capital of 2nd largest economy overshot and peaked by 1990 and prices still went down... to normal... market equilibrium.
the market found a balance... as did Germany after unification..
Went down to 'normal.' Please tell us all what this 'normal' price amounts to in Tokyo.
Went down to 'normal.' Please tell us all what this 'normal' price amounts to in Tokyo.
go look it up...https://www.google.com/#q=japanese+housing+bubble
Bigsby
2013 Dec 30, 3:13pm
I am way too old to be fooled by that nonsense... you sound like an echo of the 2002-2008 US housing bubble... I really mean that... better yet could even pass
as the Silicon Valley Tech bubble of late 90s..."the world is entirely different place".
LOL! who are you BS'ing..
How long have house prices been rising above your supposed mean in London? What are the forecasts for house prices over the next five years? How far away from your mean would that leave house prices?
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Well...I am back again like every year keeping everyone posted. Nothing new to say other than prices have shot up even further in 2013. So have rents. My mortgage is way under what it would cost to rent my own house (due to refi-ing at 1.25% lower than when we bought). Glad I snapped out of my own bear mindset that I had for years and pulled the trigger. When we bought we could not know prices would go up like they have and we didn't buy because I predicted prices to go up. We simply bought because we used to pay a shitload of money in rent and when we did the common sense calc we realized that its equal to buying. Then we found a place (after along long search) that we love and can afford (was exactly on par with the rent we used to pay - for a much smaller house). The fact that interest rates kept sinking was a pleasant surprise. It feels good to have a cheap mortgage locked in for 30 years. If I wanted to get out of this house and relocate it would be no problem. I could sell it for much more or rent it for much more than my mortgage so we feel barely "trapped".
Here is a link from my post last year and the year before.
Interestingly enough, most posters that advised me to not buy and that I made a huge mistake have disappeared from this forum or taken on new identities (lol - we know who you are). That is one way to deal with being wrong.
SubOink says
HAPPY NEW YEAR!!!
#housing