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toothfairy
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2012 Mar 3, 1:35pm
If my math is right if gold prices hold at current level this means house prices will need to triple to get bck to the historic ratio.
bubblesitter
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2012 Mar 3, 3:14pm
this means house prices will need to triple to get bck to the historic ratio.
Hahahaha. I haven't laughed that hard in a while.
toothfairy
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2012 Mar 3, 11:20pm
Dont worry, last time prices were this low it took 10 years to get back to the average so youve still got time.
dunnross
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2012 Mar 3, 11:33pm
I would be curious to see this chart for the Bay Area. I'll bet, we are nowhere near the trough in housing, here. Also, as far as how much money has been printed by the FED, we are are living in unprecedented times, so gold has a lot more to go on the up-side, while housing has a lot more to fall.
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http://www.financialsense.com/contributors/daniel-amerman/2011/11/18/gold-housing-ratio-falls-to-historic-low
This must mean something to the gold bugs doesnt it?
As shown at "Point A", on an average annual basis, there was a previous modern ratio low of 99 ounces of gold to buy a house when gold reached its financial crisis peak valuation in 1980. Real estate was remarkably cheap relative to gold - and real estate investment would outperform gold by a huge margin over the 21 years to come.
"Point B" occurred in 2001, with the Gold / Housing ratio reaching a high of 543 ounces of gold being needed to buy a single family home. Gold was remarkably cheap relative to real estate - and gold asset prices would outperform real estate asset prices by a huge margin over the 10 years to come.
The current price of gold (as of November 15, 2011) is reflected in "Point C", which shows a Gold / Housing ratio of 96 ounces of gold being needed to buy the average single family home. This is only 18% of the 543 ounces required in 2001. Real estate is once again remarkably cheap, when compared to gold.
#housing