Skip to main content

Inflation adjusted home prices (US)

This chart of US inflation-adjusted home prices caught my eye as I leafed through Investment Postcard's recent, "Words from the wise", roundup.

As you'll note from looking at the chart above, we are currently in the midst of a sharp correction from the near-parabolic highs reached during this decade's "housing bubble". From the peak in 2004 to the most recent low (just below $170,000), we see a decline of around 50 percent in the median home price.

If this were a stock chart, we might note that the most recent low also violated a line of long-term support (drawn in red) at the $170,000 price level. This is the level from which home prices "broke out" in an advance above their previous highs beginning in the mid-1990s.

Assuming this type of chart inference is applicable to real estate prices, can we expect median home prices to return to their previous "trading range" of $145,000-$170,000 in inflation adjusted terms?

In any case, I felt the chart provided an excellent (and long-overdue) update to one of our original posts on home prices: Robert Shiller's study of US housing price data. Enjoy the look back (to the uncertain days of the bubble top) and the current data, with its implications for what may lie ahead.

Related articles and posts:

1. Single family home prices (inflation adjusted) - Big Picture.

2. Parsing the recent housing data - Finance Trends.

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance , I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart. So here's what a real stock market bubble looks like.  Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ $BCOR pic.twitter.com/xjsMk433H7 — David Shvartsman (@FinanceTrends) February 24, 2015   For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan , turned to rubble. As detailed in our post, " Round trip stocks: Momentum booms and busts ", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months.  In a pattern common to many parabolic shooting stars, the s

Jesse Livermore: How to Trade in Stocks (1940 Ed. E-book)

If you've been around markets for any length of time, you've probably heard of 20th century supertrader, Jesse Livermore . Today we're highlighting his rare 1940 work, How to Trade in Stocks (ebook, pdf). But first, a brief overview of Livermore's life and trading career (bio from Jesse Livermore's Wikipedia entry). "During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth $3 million and $100 million after the 1907 and 1929 market crashes, respectively. He subsequently lost both fortunes. Apart from his success as a securities speculator, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Ironically, Livermore sometimes did not follow his rules strictly. He claimed that lack of adherence to his own rules was the main reason for his losses after making his 1907 and

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL!  Please bookmark our new web address at Financetrendsletter.com Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner .   Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead! As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter . You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter).  Stay up to date with our real-time insights and updates on Twitter .