patrick.net

The change in inflation adjusted dollars ought to be close to zero, so 3.4 percent is not bad.

Off topic: How do you start a new thread?

rgd2001 says

Off topic: How do you start a new thread?

Up top, on right .. click "Write a post"

You have to have made three comments before you can see the "Write A Post" link.

I had to do that to stop the spammers from writing new posts.

You mean to say, there actually is a relationship between prices and inflation ?

What a novel idea!

What happens in SoFla can happen in NoCal

yes in general prices track inflation of course there ARE exceptions.

An interesting thing about those graphs you just posted. during the last recession it looks like
the only areas that dipped below the inflation line were Florida, Stockton, and Vallejo. That should tell you something right there!

toothfairy says

yes in general prices track inflation of course there ARE exceptions.
An interesting thing about those graphs you just posted. during the last recession it looks like

the only areas that dipped below the inflation line were Florida, Stockton, and Vallejo. That should tell you something right there!

Yes, but all the others came pretty close. Also, the higher the spike, the lower the drop, so, this time, I would expect all of them to drop below the inflation adjusted line.

the rest of Thomas graphs right here.

http://www.housingbubblebust.com/index.html

interesting graphs but I'm not able to garner any real trend from these. Some of them are all over the map.
Not every city has a bubble then falls perfectly in line like Florida and Vallejo.

sfbubblebuyer says

The change in inflation adjusted dollars ought to be close to zero, so 3.4 percent is not bad.

The 3.4% is total, not rate of growth.

I would expect it to be much higher than 3.4%.

House are bigger, and have more amenities than they did in 1980, so the real cost should be more. Not to mention households make more than they did in 1980 in real terms, so can afford to pay more for land.

Then again, maybe the median home has less land.

Houses may be bigger in other parts of the country, but definitely not in the Bay Area. Here, the housing stock hasn't changed much since the 1950's, let alone the 1980's. Also, construction and materials cost is way down, so it is actually cheaper to stock your house with the better amenities than it was in the 1980's.

dunnross says

so it is actually cheaper to stock your house with the better amenities than it was in the 1980’s.

It's cheaper to put even cheaper materials and over all general crap in your house.
But quality will cost you, if you can find it, before it's popularized then marginalized by faux knock offs.
Then that's all to be found.

Cabinets my look newer and better, but actually they are particle board, with a thin plastic finish on the base cabinets, and veneer on the doors. There's cabinets from the 50's in need of nothing more than refacing the Formica and replacing the hardware. Your Average Cabinet from Homedepot, Lowe's, Ikea or the like will NEED total replacing in 10 to 20 years.

You don't realize just what crap all Drywall is, until you have plaster walls from the 50's and earlier. Sure hanging pictures on the wall is a chore, but it helps make the house solid and rigid. The pre 70's houses carry the Insurance industry down here. Sure it's the Older houses they charge more, but it's the Old houses that survives storm after storm, while newer houses roofs blow off or sustain major damage, window seals leak, floors sink and sag ect.

I've got 5 exterior doors on my house I wan't to change out. I haven't seen a single door at any of the lumber stores I'd hang on any of them. Door hardware is Slumlords dream, but nothing of secure quality, Windows look like they made by the Suzie Bake oven company, just dated cheap crap that hasn't even left the store yet and it's freaking Dated. I wouldn't put it on my house on a Bet!

It's why people over compensate by finishing their refurb job off with Marble counter tops, somethings gotta take your eyes off the cheap third rate shit they're sitting on.

toothfairy says

yes in general prices track inflation of course there ARE exceptions.
An interesting thing about those graphs you just posted. during the last recession it looks like
the only areas that dipped below the inflation line were Florida, Stockton, and Vallejo. That should tell you something right there!

Yes there are exceptions...

http://www.paloaltoonline.com/news_features/real_estate/fall2000/2000_09_22.trends.php

"No one wants to recognize it, but between 1989 and 1992, prices dropped 30 to 40 percent. There's no question that could happen again. Everything has a cycle and real estate is no exception. It's foolish to think prices will go up forever. In the longer term they will, if you can weather the downturns in between. There's no way to know," Dancer said.

It was the year Manhattan apartment prices actually went down and some California builders, staggering under unsold inventories, gave away a new car with each house sold.

http://pqasb.pqarchiver.com/chicagotribune/access/24714138.html?dids=24714138:24714138&FMT=ABS&FMTS=ABS:FT&type=current&date=Jan+05%2C+1991&author=E.+Scott+Reckard%2C+Associated+Press.&pub=Chicago+Tribune+(pre-1997+Fulltext)&desc=Bad+news+hits+both+coasts%3B+Midwest+rides+out+storm&pqatl=google

In Florida, new homes and condos sat empty because retirees could not sell their homes up North. Would-be home sellers in affluent New York suburbs slashed asking prices by $100,000 and more, and still no takers.

It was the year when Lucille Ball's mansion in Beverly Hills - an enclave where common economic trends aren't supposed to apply - sat unpurchased even after the asking price was cut from $7.8 million to $5.6 million.

I remember the real estate slump during the very early 1980's, when rates were in mid-double digits for 30-year mortgages, and for 30-year treasuries. I was not living in Shanghai nor Mumbai at the time. I was here in the Hip and Cool Bay Area.

Last week, an officemate has shared with me how he's used data crunched from that period to prove that when the real cost of borrowing will go up, which he and I both think will happen again, to prove that home prices will not tank when rates go up. He is confident from his analysis, and so his recent (2008) Fortress purchase continues to look like a sound investment, not withstanding even the privilege for his kids to go to a high API school.

Yes, I remember that version of events too, just like his spread sheet conclusion: nominal prices in the region held up during that time of very dear interest rates.

I tried to explain to him that almost all of the mortgages were assumable during that time. The classified ads would show the address, details on BR/BA, etc., all the usual details you would expect to see on a listing. RIght there with those physical details data, would be the terms of the mortgage that the buyer would assume. It was as much a part of the sale as the physical details of the house itself. Buyers were only financing the difference between the sellers' balance and the sales price. In many such ads, the seller would offer to finance the second mortgage, often showing the terms they were offering for the second. At those interest rates, who could blame them?

He listened politely but was not really interesting in considering this angle. I'm not even sure he believed that I knew what I was talking about. Wouldn't be the first such person (Serpentor?) to tell me I don't know what I am talking about.

All it would take is a trip the library to look at old newspaper ads, but who has the time for that?

He has it all figured out, and I am just a podunk local yokel.

Tenouncetrout says

It’s cheaper to put even cheaper materials and over all general crap in your house.
But quality will cost you, if you can find it, before it’s popularized then marginalized by faux knock offs.

Soooo true. I won't even look at a new house for this reason. WTF is with the GD bedroom doors that you can't slam because they're lighter than air resistance??

sybrib says

the Hip and Cool Bay Area

Not to worry, since the wealthy foreigners and investors are actively buying up everything in SF, LA, NYC, etc. We're already living in a Hip and Cool New World. That's why prices will always go up in Towns That Matter.