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

To: Metacomet who wrote (57865)7/17/2006 1:00:55 PM
From: ChanceIsRespond to of 306849
 
>>>Not the least because we have seen record appreciation in real estate valuations while incomes have been static to declining in the last 6 years or so....<<<

That is why it is a bubble. It just like NASDAQ P/Es of 100 or so in 2000.

In the long term, "roof over your head" costs should be about 27% of gross personal income. Things are way out of whack. Either labor rates will have to rise - not likely with global competition or w/o massive productivity increases in the US - or housing prices will have to drop.



To: Metacomet who wrote (57865)7/17/2006 3:10:50 PM
From: Elroy JetsonRespond to of 306849
 
Increases in income (GDP or Per Capita Income) match the increase in real estate prices in the long term.

The Real Estate Research Council, the top appraisers in Los Angeles, have maintained a same-home index of home prices since 1895. While there are wide divergences in the short-term, you can clearly see that real estate prices are driven by income.

Here is a comparison of the RERC index with Per Capita Income.



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