<<as such it can't "blow up.">>
Oh yeah? Try extrapolating the curve out to, say 2012, or 10 years beyond the 2002 data point.
I get a value of about $5,000, versus $3,500 today (whatever this means). If I use the best-fit curve from the apparently empirical data, its more like $6,000. If nothing else, you are taking 5% of an increasingly large number.
I would suggest these curves have nothing at all to do with California or other bubble markets, where these types of increases would apparently result in a median state home price of $1,000,000+ in 5 or 6 years.
I want to look later at the credibility of the math, where the net 20% decline in home prices between, say, 1990 and 1995, which would have to be added to the "lost" 5% per year in appreciation, resulting in the housing price falling behind by something like 60%, has been equalized by catch-up tripling of prices between 1998 and the present (at least in CA).
Also, the chart implies that the potential effects of kamikaze loans and speculative forces are just background and don't result in serious divergences from the long-term average. This is hard to imagine, particularly in the face of housing data over the last 6 months.
No time for this now...I have to get back to work so I can pay my friggin' mortgage. |
