Housing Bubble… Continued
To continue on my thoughts from last time. In his book, Irrational Expectations, Robert Shiller points out that from trough to peak housing prices have increased 52% since 1995 (in inflation adjusted terms)! That’s pretty amazing, especially based on his statement that housing over the last 100+ years have increased at only 0.4% per year in real terms! (Inflation adjusted)
Things worse than Shiller’s book lets on
However, the fact is this: things have gotten even crazier since his book was published. I pulled data from the Treasury and from the Office of Federal Housing Enterprise Oversight, and found out that from trough to peak prices have increased 65% in real terms, and by a whole lot more in nominal terms. The graphs below (I made them myself from combined data from the Federal Reserve for inflation numbers and from the Office of Federal Housing Enterprise Oversight) are from Q4 1989 to Q1 2006, so they don’t represent from trough to peak, but instead represent the last decade and a half.
The graph with the greatest increase is in nominal terms (non-inflation adjusted), and the one that first slopes downward before going up is in inflation adjusted terms.
(graphs no longer available – lost in hosting transfer)
