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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Paul Senior who wrote (5718)10/1/2002 12:49:15 AM
From: Elroy JetsonRead Replies (1) of 306849
 
The math to calculate returns is fairly simple. In the PDF file csupomona.edu
Look at the first chart titled "Indexes of Home Prices - SC versus NC".

The price increase between 1990 and 2002 for Southern California is 128.9 / 100 = 1.289
Compounded over 12 years, this is 1.289 ^ (1/12) ie 1.289 to the 0.0833 power = 1.0214 or 2.14% per year annually.

To learn why people do not correctly perceive their true returns on real estate you need to look at psychology.
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