patrick.net

tatupu70 says

This time it might be different

This time IS different.

http://research.stlouisfed.org/fred2/series/FF

In my local area, I'm seeing a standoff between the lower and upper ends of the housing market.

The lower end is selling and cutting prices regularly, while the middle/upper ends are NOT dropping prices at all - however NONE of the middle/upper priced homes are selling.

This winter will be interesting. I think we are finally entering the long awaited double dip... This will be nice for those who have been saving the past several years and are liquid.

joshuatrio says

In my local area, I’m seeing a standoff between the lower and upper ends of the housing market.
The lower end is selling and cutting prices regularly, while the middle/upper ends are NOT dropping prices at all - however NONE of the middle/upper priced homes are selling.
This winter will be interesting. I think we are finally entering the long awaited double dip… This will be nice for those who have been saving the past several years and are liquid.

You may be right Joshua, but in case you weren't reading the message boards last year, your exact statement about "this winter will be interesting" was said then too.

ch_tah says

joshuatrio says

In my local area, I’m seeing a standoff between the lower and upper ends of the housing market.

The lower end is selling and cutting prices regularly, while the middle/upper ends are NOT dropping prices at all - however NONE of the middle/upper priced homes are selling.

This winter will be interesting. I think we are finally entering the long awaited double dip… This will be nice for those who have been saving the past several years and are liquid.

You may be right Joshua, but in case you weren’t reading the message boards last year, your exact statement about “this winter will be interesting” was said then too.

True - last winter the scenarios were identical. Guess we will see if another $8k tax credit pops up out of thin air.

shrekgrinch says

An article written by a total moron, for total morons.
Of course it matters because the individual can not purchase ‘the same amount’ of the asset for the monthly payment. The author of that article totally ignores (or just plain doesn’t understand) that basic concept

You really don't get it, do you?

shrekgrinch says

No, you are showing your total lack of understanding with economics.

I don't know how else to try to explain it to you. You obviously aren't able to understand the most basic of concepts. Even Roberto gets it. He and Troy think that history may not be a good guide for the current situation--that's a completely reasonable position. You, however, seem to claim that history backs up your viewpoint when it clearly shows exactly the opposite of what you have posted. I don't understand how you can continue to argue this point?

robertoaribas says

ch_tah: interest rates dropped a full percentage point, PLUS the government gave first time buyers $8000 to buy… That stopped the interesting part in terms of price…

We'll see what happens with interest rates.

For the bay area, I don't know if the $8k credit made much of a difference. Houses in decent parts around here start at $600k. Good parts of Cupertino are $1M+. I don't see $8k affecting those prices. I would think the $8k credit may have actually lowered median prices by helping lower income people disproportionately and enabling them to purchase homes on the low end of the spectrum.

shrekgrinch says

Because you refer to a history that doesn’t exist now. That is why.
Are wages going up? No. Will they go up when interest rates go up? No and/or ‘not enough’.
What funded the housing boom prices? Everyone making 20% salary gains year by year? No. For most, it was the debt they could get, nothing more.
Rising interest rates aren’t just about higher monthly payments. It is also about those being ‘priced out’ of the market completely.
In short, you all cling to the apple that was than the oranges that will be (and was predominantly so in the vast majority of the historical past).
It is you who ‘don’t get it’. Really.

Ah, yes. Finally, you are starting to get it. Today is a good day for you Shrek-any day in which you learn something is a good day.

So you now accept that history does not support your argument at all. Excellent. And you have placed yourself firmly in the "this time it's different" camp. Fine. At least you are starting to make some sense now...

http://www.redfin.com/CA/Laguna-Beach/232-Chiquita-St-92651/home/3260552

As the Duck claims, rich people with cash are stepping in to help rich people in trouble.

robertoaribas says

bubble, that thing sold for 1.7 million in 2006… half a million down, half a million to go…
Somebody has to buy on the way down, to set falling comps for the rest of the world!

The reason why I put that up is because it has been on the market since June 2009 -- The Duck's artificial bottom.

shrekgrinch says

Uh, not really. The abnormality was the last thirty years. You seem to think of it as the historical baseline

Oh, so you have some data suggesting there was a strong correlation between interest rates and home prices prior to 1980?

robertoaribas says

it is proven fact that there is a very strong correlation between children’s shoe size, and their vocabulary size. Kids with big feet know many more words that kids with small feet.
Also, it is a proven fact that there is an extremely strong correlation between ice cream sales in Australia, and shark attacks.
Once you have established that two variables are being influenced by a third ‘confounding’ variable, to even continue to discuss their correlation as if it meant something proves nothing but limited ability to think logically.
Stretch your kids feet to help his vocabulary, and ban ice cream to stop shark attacks.

Agreed. However, since there is no correlation I figured it might help him to understand.

shrekgrinch says

tatupu70 says

Oh, so you have some data suggesting there was a strong correlation between interest rates and home prices prior to 1980?

Prove to me the sky is blue and then I’ll provide the historical proof anybody with a pigeon’s brain and access to Google can find.

OK--so what you're saying is that you realized you are wrong but don't want to admit it. I understand. You have a large ego and it's hard to accept it.

tatupu70 says

shrekgrinch says

tatupu70 says

Oh, so you have some data suggesting there was a strong correlation between interest rates and home prices prior to 1980?

Prove to me the sky is blue and then I’ll provide the historical proof anybody with a pigeon’s brain and access to Google can find.

OK–so what you’re saying is that you realized you are wrong but don’t want to admit it. I understand. You have a large ego and it’s hard to accept it.

The Angry Bear article you posted seems somewhat dubious to me. I am always wary of authors who attempt to "reason" out a particular hypothesis without the benefit of any actual data. Why on earth would you attempt to disprove a correlation between home prices and interest rates, by posting charts of home prices vs. HOUSEHOLD INCOME? There doesn't seem to be any data at all on interest rates in the article. This seems odd, considering it is the very crux of what the author is trying to prove. He seems to base his argument chiefly on a flimsy analogy to buying a car. Hmmm...is that really the same thing?

I was able to find an actual chart of home prices vs. interest rates here:

Looking at the graph, interest rates DO seem to be inversely proportional to home prices (1950s-1960s and 1990s-2006), the chief exceptions apparently being that bubbles tend to deflate even if interest rates are falling. Perhaps this can be explained by the possibility that falling interest rates may slow a correction, but that there is no force great enough to actually prevent a correction from happening.

If there is any correlation in that graph, it is very, very small. The interest rate in 1950 was a little over 2% and the home price index was about 105. In 1976, the interest rate was ~7.5% and the home price index was about 106. In 1982 the interest rate was almost 15% and, guess what, the home price index had risen to about 107 or 108. I don't see how you can say there is any correlation there at all.

gameisrigged says

tatupu70 says

shrekgrinch says

tatupu70 says

Oh, so you have some data suggesting there was a strong correlation between interest rates and home prices prior to 1980?

Prove to me the sky is blue and then I’ll provide the historical proof anybody with a pigeon’s brain and access to Google can find.

OK–so what you’re saying is that you realized you are wrong but don’t want to admit it. I understand. You have a large ego and it’s hard to accept it.

The Angry Bear article you posted seems somewhat dubious to me. I am always wary of authors who attempt to “reason” out a particular hypothesis without the benefit of any actual data. Why on earth would you attempt to disprove a correlation between home prices and interest rates, by posting charts of home prices vs. HOUSEHOLD INCOME? There doesn’t seem to be any data at all on interest rates in the article. This seems odd, considering it is the very crux of what the author is trying to prove. He seems to base his argument chiefly on a flimsy analogy to buying a car. Hmmm…is that really the same thing?
I was able to find an actual chart of home prices vs. interest rates here:

Looking at the graph, interest rates DO seem to be inversely proportional to home prices (1950s-1960s and 1990s-2006), the chief exceptions apparently being that bubbles tend to deflate even if interest rates are falling. Perhaps this can be explained by the possibility that falling interest rates may slow a correction, but that there is no force great enough to actually prevent a correction from happening.

According to the chart there is not a correlation between interest rates and prices at all. A huge rise in interest rates does not correlate to a huge drop in the price . Likewise the huge runup in price does not seem to correlate to a huge drop in interest rates. Besides, interest rates are very relative. I remember when 8% was a reasonable norm for a loan and I dont think prices were affected because of it. That does not mean that housing is not overpriced but I am just saying it has little to do with interest rates.

correlation is not black and white - it's not a case of there is or there is no correlation.

the correlation coefficient between two variables(home price index and interest rates in this case) ranges from -1 to +1.
to say there is no correlation implies the correlation coefficient is zero, which would also imply you have calculated that value to determine there is zero correlation.

eyeballing the chart indicates the two variables are negatively correlated.
how strongly they are negatively correlated is determined by calculating the correlation coefficient (which i'm too lazy to do).

APOCALYPSEFUCK says

We’re so fucked, we’re gonna wake up tomorrow with our assholes between our eyes!

what if it's already there? where then shall it be placed?

mike4518 says

correlation is not black and white - it’s not a case of there is or there is no correlation.
the correlation coefficient between two variables(home price index and interest rates in this case) ranges from -1 to +1.

to say there is no correlation implies the correlation coefficient is zero, which would also imply you have calculated that value to determine there is zero correlation.
eyeballing the chart indicates the two variables are negatively correlated.

how strongly they are negatively correlated is determined by calculating the correlation coefficient (which i’m too lazy to do).

If I understand you correctly, I think that's the point I meant to make. Yes, you can cherry-pick 2 points on the graph and thus make it appear, in those limited parameters, as though the two factors are not inversely proportional, as Taintpud70 has done. And that was part of my beef with the Angry Bear article. The jist of the article was that because the 2 things don't correlate perfectly 100% of the time, that there is no correlation at all, and I don't think that follows logically. Sometimes it gets cloudy but does not rain. That doesn't mean there is no correlation between the appearance of clouds and the appearance of rain.

mike4518 says

eyeballing the chart indicates the two variables are negatively correlated.

I think you need your eyeballs checked.

gameisrigged says

Yes, you can cherry-pick 2 points on the graph and thus make it appear, in those limited parameters, as though the two factors are not inversely proportional, as Taintpud70 has done

Cherry pick? Come on. Cherry picking would be looking at 1975 - 1979. Or 1986 - 1989. Or 1989 - 1994. I really fail to see how anyone could reasonably say there is a negative correlation between those two charts.

I'll say again--if there is any correlation at all there, it is VERY weak. It is obviously strongly outweighed by other factors--such as wage inflation.

Finally--I'm assuming that the home price index is inflation adjusted. We should really be using nominal home values--not inflation adjusted.

gameisrigged says

mike4518 says

correlation is not black and white - it’s not a case of there is or there is no correlation.
the correlation coefficient between two variables(home price index and interest rates in this case) ranges from -1 to +1.
to say there is no correlation implies the correlation coefficient is zero, which would also imply you have calculated that value to determine there is zero correlation.
eyeballing the chart indicates the two variables are negatively correlated.
how strongly they are negatively correlated is determined by calculating the correlation coefficient (which i’m too lazy to do).

If I understand you correctly, I think that’s the point I meant to make. Yes, you can cherry-pick 2 points on the graph and thus make it appear, in those limited parameters, as though the two factors are not inversely proportional, as Taintpud70 has done. And that was part of my beef with the Angry Bear article. The jist of the article was that because the 2 things don’t correlate perfectly 100% of the time, that there is no correlation at all, and I don’t think that follows logically. Sometimes it gets cloudy but does not rain. That doesn’t mean there is no correlation between the appearance of clouds and the appearance of rain.

You guys seem to get bogged down in the minutia too often. Looking at the chart, prices (mildly, significantly) go (up, flat, down) when rates go (up, flat, down). Pick one from each parenthetical and it is valid. That tells you that the correlation between the two is very weak. Do your fancy math, and you will see. The point is that anyone arguing that rates going up means prices will go down is using weak logic.

ch_tah says

The point is that anyone arguing that rates going up means prices will go down is using weak logic.

whoah, hold on there tex.

Nobody can deny that, ceteris paribus, rates going up will push home prices down.

There was a very strong correlation in 2002 (with the fall of mortgage rates) a rise in home valuations.

The question is about the ceteris paribus part. I totally agree that we shouldn't expect rates to rise in anything but response to burgeoning wage inflation, since the Fed has historically pushed up rates to cool off the housing market (late 1970s, late 1980s, late 1990s, 2006-2007).

But I do think it's possible for the Fed to lose control of rates and find mortgage rates decoupled from its policy levers. I don't know enough about these levers to say why or how, but discounting this as "impossible" doesn't seem "logical". Everybody to the right of Barney Frank is demonizing the Fed these days, maybe they'll just say 'fine, have fun guys -- we'll be at Vail if & when you change your minds this month'.

tatupu70 says

mike4518 says

eyeballing the chart indicates the two variables are negatively correlated.

I think you need your eyeballs checked.
gameisrigged says

Yes, you can cherry-pick 2 points on the graph and thus make it appear, in those limited parameters, as though the two factors are not inversely proportional, as Taintpud70 has done

Cherry pick? Come on. Cherry picking would be looking at 1975 - 1979. Or 1986 - 1989. Or 1989 - 1994.

Oh, O.K. - You picked 1950, which happens to be a year when prices were lower, even though in 1955 prices fell FOR AN ENTIRE DECADE. Oh, no, there sure isn't any cherry picking going on there, no siree.

I really fail to see how anyone could reasonably say there is a negative correlation between those two charts.

I fail to see how anyone could NOT. Unless they're grasping at straws trying to justify a permabull philosophy.

I’ll say again–if there is any correlation at all there, it is VERY weak. It is obviously strongly outweighed by other factors–such as wage inflation.

I think we already established that it's not a 100% correlation, and I specifically said that it appears to be outweighed by other factors at times. We also established that if two things are not 100% correlated, that does not imply that they are not correlated AT ALL.

Finally–I’m assuming that the home price index is inflation adjusted. We should really be using nominal home values–not inflation adjusted.

Why? I would say precisely the opposite. The unadjusted numbers would always go up over time as the value of currency diminishes, telling us nothing.

Nomograph says

APOCALYPSEFUCK says

We’re so fucked, we’re gonna wake up tomorrow with our assholes between our eyes!

Isn’t that called a Dirty Sanchez or something?

I think it's more like a Cleveland Steamer, or a Rusty Trombone.

here's the post with the price to rate chart:
http://seattlebubble.com/blog/2010/02/09/do-rising-interest-rates-lead-to-falling-home-prices/

the raw data for the chart is from robert shiller's website:
http://www.irrationalexuberance.com/

raw interest rate data:
http://www.econ.yale.edu/~shiller/data/ie_data.xls
raw home price data:
http://www.econ.yale.edu/~shiller/data/Fig2-1.xls
how to calculate the correlation coefficient (or just use excel's correlation function; not sure if you need the stats package install):
http://en.wikipedia.org/wiki/Correlation_and_dependence

if anyone wants to know the actual answer, instead of yelling at each other and throwing out fuzzy unconvincing arguments, just run the calculation. i'm too lazy and don't care enough to actually do the calculation.

gameisrigged says

Why? I would say precisely the opposite. The unadjusted numbers would always go up over time as the value of currency diminishes, telling us nothing

The unadjusted numbers would go up more significantly during inflationary times which would also most likely coincide with high interest rates.

tatupu70 says

gameisrigged says

Why? I would say precisely the opposite. The unadjusted numbers would always go up over time as the value of currency diminishes, telling us nothing

The unadjusted numbers would go up more significantly during inflationary times which would also most likely coincide with high interest rates.

Yes, things cost more when there's inflation. By definition. That's why you adjust for it, so you know what the REAL cost is. There's no point in using unadjusted home prices, unless you are going for a disingenuous way to "prove" your belief that there's no correlation with interest rates.

gameisrigged says

Yes, things cost more when there’s inflation. By definition. That’s why you adjust for it, so you know what the REAL cost is. There’s no point in using unadjusted home prices, unless you are going for a disingenuous way to “prove” your belief that there’s no correlation with interest rates.

Actually, that's the only way to look at it. Think about it for a second. Say inflation picks up and rents and home prices double in 10 years (just keeping up with inflation). Would you rather have owned or rented during this time? Of course you would have rather owned.

When you buy a house you must pay for it in nominal dollars, not real dollars. Adjusting for inflation is basically adjusting out the reason why interest rates and prices seem to move together at some points in history.

gameisrigged says

That’s why you adjust for it, so you know what the REAL cost is.

The REAL cost in this case is nominal dollars. If you disagree, I challenge you to pay someone in 1970 dollars. Tell me how that goes.

Troy says

ch_tah says

The point is that anyone arguing that rates going up means prices will go down is using weak logic.

whoah, hold on there tex.
Nobody can deny that, ceteris paribus, rates going up will push home prices down.
There was a very strong correlation in 2002 (with the fall of mortgage rates) a rise in home valuations.
The question is about the ceteris paribus part. I totally agree that we shouldn’t expect rates to rise in anything but response to burgeoning wage inflation, since the Fed has historically pushed up rates to cool off the housing market (late 1970s, late 1980s, late 1990s, 2006-2007).
But I do think it’s possible for the Fed to lose control of rates and find mortgage rates decoupled from its policy levers. I don’t know enough about these levers to say why or how, but discounting this as “impossible” doesn’t seem “logical”. Everybody to the right of Barney Frank is demonizing the Fed these days, maybe they’ll just say ‘fine, have fun guys — we’ll be at Vail if & when you change your minds this month’.

I thought people were talking about reality not vacuums. The chart used above shows no correlation. Yes, if your hypothetical occurs, things "will be different this time." I thought most people were against using that logic though.

Even the "strong correlation" in 2002 isn't necessarily strong. Loose lending may have been the prime driver for price increases not rate declines. If a mortgage company doesn't bother to check income levels and use sneaky teaser rates, anyone can afford anything.

I keep looking for the chart that guarantees the future.

Phenoms ;

We drive 73 mph, no matter the posted speed limit.
We do not pay over 14 % mortgage
We do not drive over 50 minutes to or from work
We pay 2.5 times our annual income on our homes. The bubble took us up to 8 times.

We made a bunch of money introducing the computer. We spent a bunch of money on Real Estate. Now what ?

tatupu70 says

gameisrigged says

Yes, things cost more when there’s inflation. By definition. That’s why you adjust for it, so you know what the REAL cost is. There’s no point in using unadjusted home prices, unless you are going for a disingenuous way to “prove” your belief that there’s no correlation with interest rates.

Actually, that’s the only way to look at it. Think about it for a second. Say inflation picks up and rents and home prices double in 10 years (just keeping up with inflation). Would you rather have owned or rented during this time? Of course you would have rather owned.

That's an utter non-sequitur. We weren't discussing whether you would have "rather rented or owned"; we were simply discussing whether there is a correlation between interest rates and home prices.

gameisrigged says

That’s why you adjust for it, so you know what the REAL cost is.

The REAL cost in this case is nominal dollars. If you disagree, I challenge you to pay someone in 1970 dollars. Tell me how that goes.

You only prove my point. One cannot pay for something today in 1970 dollars, because inflation exists. Therefore, if you want to look at prices over time and be able to say anything meaningful about them other than that they went up, you have to adjust them for inflation. I'm not sure what you're having trouble understanding here.

ch_tah says

Even the “strong correlation” in 2002 isn’t necessarily strong. Loose lending may have been the prime driver for price increases not rate declines. If a mortgage company doesn’t bother to check income levels and use sneaky teaser rates, anyone can afford anything.

You are confusing correlation with causation. The former does not necessarily imply the latter. If you want to discuss WHY interest rates are inversely proportional to home prices, you can start such a discussion. But the statement was made here that they are NOT inversely proportional, period, and that is false.

gameisrigged says

That’s an utter non-sequitur. We weren’t discussing whether you would have “rather rented or owned”; we were simply discussing whether there is a correlation between interest rates and home prices.

No, actually we were talking about whether it's more appropriate to use nominal or real housing prices. Try to keep up. And for that discussion, it's completely relevant.

gameisrigged says

You only prove my point. One cannot pay for something today in 1970 dollars, because inflation exists. Therefore, if you want to look at prices over time and be able to say anything meaningful about them other than that they went up, you have to adjust them for inflation. I’m not sure what you’re having trouble understanding here

Wait a second. I thought you and others were arguing that when interest rates rise, nominal housing prices will fall. Is that not what you believe?

tatupu70 says

gameisrigged says

That’s an utter non-sequitur. We weren’t discussing whether you would have “rather rented or owned”; we were simply discussing whether there is a correlation between interest rates and home prices.

No, actually we were talking about whether it’s more appropriate to use nominal or real housing prices. Try to keep up. And for that discussion, it’s completely relevant.

Uhm, no. Here's a clue, dipshit - If you are going to respond to ME and take issue with what I posted, then take 1/2 a second to actually READ what I wrote. Don't answer the imaginary voices in your head.

gameisrigged says

You only prove my point. One cannot pay for something today in 1970 dollars, because inflation exists. Therefore, if you want to look at prices over time and be able to say anything meaningful about them other than that they went up, you have to adjust them for inflation. I’m not sure what you’re having trouble understanding here

Wait a second. I thought you and others were arguing that when interest rates rise, nominal housing prices will fall. Is that not what you believe?

I am arguing that interest rates appear to be inversely proportional to housing prices. I made no other claims as to what I "believe".

gameisrigged says

Uhm, no. Here’s a clue, dipshit - If you are going to respond to ME and take issue with what I posted, then take 1/2 a second to actually READ what I wrote. Don’t answer the imaginary voices in your head

Wow. dipshit? Calm down there buddy. Well, here's what you wrote:

gameisrigged says

Yes, things cost more when there’s inflation. By definition. That’s why you adjust for it, so you know what the REAL cost is. There’s no point in using unadjusted home prices, unless you are going for a disingenuous way to “prove” your belief that there’s no correlation with interest rates.

Does that refresh your memory? Sure looks to me like you were talking about real vs. nominal prices. Do you disagree??

gameisrigged says

I am arguing that interest rates appear to be inversely proportional to housing prices. I made no other claims as to what I “believe”.

Again. You're previous post tells a different story.

gameisrigged says

There’s no point in using unadjusted home prices, unless you are going for a disingenuous way to “prove” your belief that there’s no correlation with interest rates

Paraphrasing--seems like you are saying that you "believe" real home prices should be used. Which is completely idiotic.

Look--I don't know how much more clearly I can make it. The premise that many here espouse is that home prices will fall when interest rates rise. And that's a reason why you shouldn't buy now. This is clearly refering to nominal home prices and not real prices. Do you agree with that statement?

tatupu70 says

Wow. dipshit? Calm down there buddy.

Dude, don't make assholic comments like, "Try to keep up", and then get your panties in a bunch when I respond in kind. You reap what you sow. If you are polite to me, I will be polite to you. If you act like a cock, then expect others to treat you in a similar fashion. It's not rocket science.

Well, here’s what you wrote:
gameisrigged says

Yes, things cost more when there’s inflation. By definition. That’s why you adjust for it, so you know what the REAL cost is. There’s no point in using unadjusted home prices, unless you are going for a disingenuous way to “prove” your belief that there’s no correlation with interest rates.

Does that refresh your memory? Sure looks to me like you were talking about real vs. nominal prices. Do you disagree??

Um, no. Since I have ALWAYS been referring to prices that are adjusted for inflation, why would I deny it?

gameisrigged says

I am arguing that interest rates appear to be inversely proportional to housing prices. I made no other claims as to what I “believe”.

Again. You’re previous post tells a different story.

You're hitting the crack pipe a little too hard, there. My previous post does not "tell a different story". What on earth are you talking about? Interest rates are inversely proportional to housing prices. Why are you having so much trouble with that? It's quite a straightforward concept.

gameisrigged says

There’s no point in using unadjusted home prices, unless you are going for a disingenuous way to “prove” your belief that there’s no correlation with interest rates

Paraphrasing–seems like you are saying that you “believe” real home prices should be used. Which is completely idiotic.

You already said you believe unadjusted prices should be used, but that makes absolutely no sense, and I explained why. Saying I'm "idiotic" does nothing to convince me of your claim.

I don't understand why you are making this so complicated. Look at the chart I posted. Does it not appear that interest rates are, for the most part, inversely proportional to home prices? Have I made any OTHER claim in this thread? Anything you post here that does not refer to my claim that interest rates are inversely proportional to home prices is a red herring.

Look fellows. Here is a chart that includes nominal home prices.

The distinguishing feature is that, until the current downturn, prices NEVER GO DOWN. That is because there is a thing called "inflation". REAL prices DO go down. Nominal prices do not. The current downturn in nominal prices is a singular event, and it would be ridiculous to try to form a general rule on the basis of a single event.

So I ask you, please tell me how it makes any kind of sense, if one is attempting to discern the relationship between interest rates and prices, to look at nominal prices which ONLY GO IN ONE DIRECTION? That's just stupid.

gameisrigged says

I am arguing that interest rates appear to be inversely proportional to housing prices. I made no other claims as to what I “believe”.

Dude--you are all over the place. I stated in a previous post that you shouldn't use inflation adjusted prices and you seemed to disagree. So, I posted why it is correct to use them and you seemed to disagree and posted it. Then when I responded to that post, you claimed that all you were talking about is the correlation between interest rates are real home prices. Whatever.

I still maintain, as I always have, that historically there has been little to no correlation between interest rates and nominal home prices. I can't tell if you agree or disagree with that statement.

gameisrigged says

I don’t understand why you are making this so complicated. Look at the chart I posted. Does it not appear that interest rates are, for the most part, inversely proportional to home prices?

No.

gameisrigged says

The distinguishing feature is that, until the current downturn, prices NEVER GO DOWN

Ray--I know you've been looking for Larry Yun. He may have turned up here....

gameisrigged says

So I ask you, please tell me how it makes any kind of sense, if one is attempting to discern the relationship between interest rates and prices, to look at nominal prices which ONLY GO IN ONE DIRECTION? That’s just stupid

Here's why. A couple of reasons

1. Because many people (not sure if you agree, because you didn't answer my earlier question) believe that as soon as interest rates rise, nominal home prices will fall.

2. Further, if you are considering purchasing a home and doing a rent vs. buy calculation the nominal house price is infinitely more important than the real home prices. When you own, you are protected against housing inflation. Looking only at real prices neglects this.

tatupu70 says

gameisrigged says

I am arguing that interest rates appear to be inversely proportional to housing prices. I made no other claims as to what I “believe”.

Dude–you are all over the place. I stated in a previous post that you shouldn’t use inflation adjusted prices and you seemed to disagree. So, I posted why it is correct to use them and you seemed to disagree and posted it. Then when I responded to that post, you claimed that all you were talking about is the correlation between interest rates are real home prices. Whatever.

I have consistently said the same thing over and over, and you keep bombarding me with non-sequiturs and red herrings. Yeah, *I'm* the one who's all over the place. Suuure......

I still maintain, as I always have, that historically there has been little to no correlation between interest rates and nominal home prices. I can’t tell if you agree or disagree with that statement.

For the umpteenth time, nominal home prices almost never go down. The current downturn in nominal home prices is an aberration. IT MAKES NO SENSE to examine nominal prices if you are trying to determine the relationship between interest rates and home prices. That would be like jumping out of an airplane with two balloons in your hands and trying to determine which balloon has more helium in it. There's nothing to agree or disagree with, because your comparison makes no sense.

tatupu70 says

gameisrigged says

I don’t understand why you are making this so complicated. Look at the chart I posted. Does it not appear that interest rates are, for the most part, inversely proportional to home prices?

No.

I disagree.

gameisrigged says

The distinguishing feature is that, until the current downturn, prices NEVER GO DOWN

Ray–I know you’ve been looking for Larry Yun. He may have turned up here….

You know, I've been wondering if you are mentally retarded. Now I'm pretty sure you are. Look at the chart of nominal home prices I posted. Before, the current downturn, please tell me where nominal prices ever go down on that chart other than tiny blips lasting a month or two. Oh, they don't? Duh.

gameisrigged says

So I ask you, please tell me how it makes any kind of sense, if one is attempting to discern the relationship between interest rates and prices, to look at nominal prices which ONLY GO IN ONE DIRECTION? That’s just stupid

Here’s why. A couple of reasons
1. Because many people (not sure if you agree, because you didn’t answer my earlier question) believe that as soon as interest rates rise, nominal home prices will fall.
2. Further, if you are considering purchasing a home and doing a rent vs. buy calculation the nominal house price is infinitely more important than the real home prices. When you own, you are protected against housing inflation. Looking only at real prices neglects this.

Dude, you are seriously obtuse as hell. You obviously are never going to understand what I am telling you, so maybe you should just forget about it.