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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: SouthFloridaGuy who wrote (23301)	8/16/2004 6:11:52 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 306849

The chart of land prices in Japan shows actual (nominal) prices, not inflation adjusted. Most Japanese who bought their home after 1985 are saddled with a mortgage debt far greater in size than the value of their home. This is the national average, so for those few homeowners who saw some appreciation, there are many whose experience is far worse than is reflected in this chart. home.pacbell.net

To: SouthFloridaGuy who wrote (23301)	8/16/2004 10:24:16 PM
From: GraceZ	Respond to of 306849

Is that nominal or real? I have yet to see a real figure applied to Japanese land prices (I'm sure it's out there somewhere if there is anyone who has accurately measured the deflation in Japan over the last 16 years). If you factor in monetary deflation using the Japanese wholesale price index, the "real" price of land is actually 9% higher than what that chart shows between 1991-2003. Unfortunately the debt secured with that land is nominal. The one stat that haunts is that prior to the crash of real estate prices in Japan, only 5% of the RE in Japan had turned over in the previous five years, the five years where RE had experienced the most price inflation. Still that didn't keep it from having a depressing psychological effect on the rest of the landowners even though their losses were merely the loss of unrealized gains. It demonstrates the asymmetry in how people experience losses as opposed to gains. Losses, even paper ones, have a much greater negative effect on psychology than gains have positive. This is one of the reasons that governments tend to choose a small amount of endemic inflation over zero or negative inflation. It tricks people into thinking they've made gains even when they are inflated away.