tag:blogger.com,1999:blog-11027528911364475.post5089535730539600448..comments2024-02-18T21:10:05.205-08:00Comments on EconomPic: "Scariest Housing-Related Chart Ever"Jakehttp://www.blogger.com/profile/07946497592651234440noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-11027528911364475.post-46702720879766344072008-12-31T23:49:00.000-08:002008-12-31T23:49:00.000-08:00Thanks for your update Jake. My main issue is wit...Thanks for your update Jake. My main issue is with stories about the housing price drops do not show the rapid runup. Look at this graph <BR/>http://mysite.verizon.net/vodkajim/housingbubble/los_angeles.html<BR/>of Los Angeles median housing prices. <BR/><BR/>That graph shows CPI corrected prices (which actually makes the rise and fall even more dramatic).<BR/><BR/>In that context, it's clear that the rise was even more dramatic than the drop. Yes, a lot of people did get burned. Retirees who took out home equity loans based on such a rapid price pop were burned (and foolish), but let's stick to the data. <BR/><BR/>The characterization of a housing market "crisis" seems implies a need to do something (lower interest rates, government mortgage guarantees, etc) in order to HOLD UP CURRENT PRICES. The suggestion is that current prices are artificially low because credit is tight and people are timid after the precipitous fall. <BR/><BR/>But prices are not lower than they should be. Looking at a graph that spans more than 2 years shows prices may finally be arriving at where they naturally ought to be (based on history). <BR/><BR/>Home prices (CPI corrected) rise maybe 3% a year over the long haul. TIP: If your home price goes up 40% in a year, it's gonna come back down.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-91658698872083341332008-12-31T16:31:00.000-08:002008-12-31T16:31:00.000-08:00No. That is exactly why median, rather than averag...No. <BR/><BR/>That is exactly why median, rather than average price is used. If there are 99 homes that were sold and 20 of them were through foreclosures, those sales are ignored as only the middle 50th in sales price is counted. <BR/><BR/>Again, average price would be highly distorted in that case.Jakehttps://www.blogger.com/profile/07946497592651234440noreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-48900176096765555662008-12-31T14:12:00.000-08:002008-12-31T14:12:00.000-08:00Is not the data distorted by the fact that the med...Is not the data distorted by the fact that the median house price is derived from recent sales, which are dominated by foreclosures and other forms of distressed selling?pwm76https://www.blogger.com/profile/06360404038525306119noreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-2773167093952658572008-12-31T12:10:00.000-08:002008-12-31T12:10:00.000-08:00Hey Max-Thanks for the post. I'd love to hear your...Hey Max-<BR/><BR/>Thanks for the post. I'd love to hear your thoughts on my response.<BR/><BR/>Regards,<BR/>JakeJakehttps://www.blogger.com/profile/07946497592651234440noreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-81516070814770322682008-12-31T10:28:00.000-08:002008-12-31T10:28:00.000-08:00This graph so distorts the truth it's painful.FIRS...This graph so distorts the truth it's painful.<BR/>FIRST: What if the graph showed the few years before this price drop? You would see those same housing prices skyrocketing. Seniors (who presumably mostly owned their homes before that run-up) are still way ahead. They just don't get the windfall from the bubble. <BR/><BR/>Also, why does the scale start at $250K? That just makes the chart look steeper than it really is. The numbers are grand enough not to require that kind of trite distortion. <BR/><BR/>I know scary stuff gets more hits, but truth is better than flash in the long run.Anonymousnoreply@blogger.com