Real Estate Roller Coaster

The folks at Speculativebubble.com have plotted Robert Schiller's inflation-adjusted housing price index on an actual roller coaster. Enjoy the ride. The end may make you queasy.

Comments

[Michael Wells]

Fun presentation. This shows housing prices staying roughly flat from 1945 to 1996, then basically doubling by 2006. Compare this to the Dow Jones, which floated just below or above 1000 from the 1960's to the 1980's, then went from about 1,000 in 1982 to 3,000 in 1992 to around 12,000 in 2000 where it's floated since then -- of course that's not accounting for inflation, I couldn't find a chart for that -- but it's still spectacular.

So what is it about this period that's sparked such tremendous gains in housing and stocks? Is it something to do with the birth of the Creative economy? And/or globalization? Is it sustainable? I doubt that either housing or stocks are going back to 1980's prices, short of a catastrophe.

Then compare with computer prices. I think a mainframe cost about $100,000 in the 1960's. I bought my first 512K desktop for about $3,000 around 1988. Today we can get something more powerful than the old mainframe for under $1,000. Does this have anything to do with the above?

[Michael Bindner]

It could be that the way the government is measuring inflation is skewed. We could also be preparing for a fall.

[DJM]

That sure ends on a pretty high point -- makes me think, sell, sell, sell, wait for the drop and then buy, buy, buy