Still Crazy After All These Years

Still crazy after all these years
Oh, still crazy, still crazy, still crazy after all these years.
--Paul Simon, singer and songwriter

Although there are plenty of reasons why there's more downside to come in the residential real estate market, the simplest explanation is probably the best. Despite the carnage we've seen over the past half-decade, home prices are still at lofty -- no, crazy -- levels, as Pragmatic Capitalism reveals in "U.S. Housing Prices Still More Expensive than Any Point in Last 120 Years":

Today’s chart of the day comes to us courtesy of Robert Shiller at Yale University. The following is Shiller’s famous inflation adjusted home price index. Interestingly, despite a 30%+ decline from peak to trough, housing prices are still more expensive than at any other point in the last 120 years when you exclude the recent bubble era. Some say housing prices have bottomed. Not unless it’s truly “different this time”.

Comments

[DavosSherman]

All bubbles overcorrect. Expect 70-90 against the y axis (barring a currency crisis that explodes into hyperinflation first).

[nowhereman]

Here, in Canada, the prices have yet to take a hit. Everyone I know is house poor, but still believe that prices will continue to improve. I learned long ago that, you don't own your stuff, your stuff owns you. I drive through the suburb where my daughter lives and the cookie cutter houses look like a house farm, all planted in neat rows. Each driveway with it's SUV and sedan because both husband and wife have to drive a long way to get to work, because they can't afford a lifestyle like this closer to the city.
It is so weird how everyone's bought into this, and I feel sorry for those who will lose it all, once sanity returns.

[they'll pay your mortgage]

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