The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: JBTFD who wrote (18328)	3/9/2004 2:34:34 PM
From: Elroy Jetson	Read Replies (1) of 306849

You are correct in observing that Los Angeles home prices in 1929 were the same as they were in the early 1970's. My Grandparents, who bought their first home in the early 1930's, were in a dramatically better position than those who purchased their homes in 1926. By contrast, compare the index of home prices to Construction Cost in 1926 and again in 1973. This index is extremely accurate. Unlike sales records of median home prices, this index re-appraises the same homes every six months. The homes in the index are slowly, incrementally, replaced in order to maintain the same age profile over time. This index was originally created in 1895 by the Los Angeles Appraisal Institute and is now maintained by the RERC, a cooperative effort of the Real Estate Department at Cal Poly Pomona in cooperation with the head appraisers from local lenders. csupomona.edu I believe we are experiencing a real estate pricing bubble similar to the 1920's. This chart demonstrates how bubble pricing can overwhelm the long-term returns you might be led to expect from real estate investment.

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