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toothfairy
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
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
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
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.
dunnross
2012 Mar 4, 12:46am
Also, S&P is still about 5-6 times overpriced relative to gold, and BA housing will not see any real price discovery until this ratio is below 1:
RentingForHalfTheCost
2012 Mar 4, 1:54am
I think the trick is to buy a gold house! Right in the middle of Cupertino next to a great school. You can't lose then! Genius
toothfairy
2012 Mar 4, 3:20am
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.
I know it sounds kind of funny right now but that's a fact not an opinion.
Now I see why Warren Buffet likes housing. If I were a betting man I'd probably go out and buy the biggest most expensive house I could find. Finance with a 4% 30 yr mortgage with as little down as possible and just live there for 10 years.
Put something like 100k down on a million dollar house in Palo Alto.
900k mortgage would only be around 4k per month.
Man this is actually kind of temping.
Patrick
2012 Mar 4, 3:27am
Put something like 100k down on a million dollar house in Palo Alto.
900k mortgage would only be around 4k per month.Man this is actually kind of temping.
Don't forget the extra $1,000 for property tax each month. And maintenance costs. And insurance. And PMI. And the $60,000 the realtor cartel will take if you want to sell.
And the potential $100,000 to $200,000 loss from depreciation in the next few years.
Maybe not so tempting.
Comments 1 - 9 of 77 Next » Last » Search these comments
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