All Forum Posts by: Robert Simpson

Case shiller home price index for Los Angeles.

This is the historic data for the tierd index. I have added in the bid and ask prices for the L.A. home price futures.

Hope you like it.

The method is just called inflation. Home prices are roughly tied to it. If home prices rise faster than inflation the next generation would not be able to afford to purchase a home.

If the rate of inflation is 3%, wages rise at 3%, instrest rates remain unchanged the home prices should rise at 3%. This would keep the affordability index unchanged.

year 1 home vallue
100,000.00

Year 2 home value
(100,000.00*1.03)=103,000.00

Year 3 home value
(103,000.00*1.03)=106,090.00

and so on...Kind of like intrest compound on an anual basis.

Hope that helps

For more on this subjuct, look into a guy named Robert Shiller. Just do a search on the net for him, he's good.

Also:

If housing prices double and tripple over a ten year exapnsion phase of the cycle, why do people start saying we have hit bottom at 25% depreciation after only two years?

People have to live some where, if they aren't buying homes they can live with Mom and Dad or rent. Unfortunately, for now they seem to be moving in with Mom and Dad.

Same thing is happening here in Southern California. Looks to me like prices will fall here fore 9 to 18 months. I leave such a wide window because it will depend on the rate of fall. The last 1/4 of last year was more than even I had thought it would be and I am "Bearish" on housing.

I think prices will stabilize after that 18 months, but don't expect to see strong appriciation for several years after that.

There is no market to speak of for raw land down here. It will be a while.

If you made it onto the CME website, check out the live quotes for the futures contract. Biggerpockets is a great forume for talking but these guys back their opinions with substancial amounts of money. They "bet" on the future of real estate markets around the country.

Money talks.

Yes, it does depend on the area, but in general, prices are going to come down for another year.

The attached file contains date from the Case shiller home price index. This data is available at the Chicago Mercentile exchage. To find it, do a search for "CME, housing" click on the result the talks about housing futures and options.

You will have to sign up for the site, but it is free and I haven't had any problems with it.

On the attached data I inserted graphs of the Atlanta and Miami market history. Just click on the tabs on the bottom of the screen to see the data for the indicated city.

A bubble is clearly present in the Miami data and that market should still have a ways to fall. The Atlanta market on the other hand shows nearly straight line appreciation. Atlanta will not fall nearly as much as Miami will on a pecentage basis.

You can use the Shiller "A history of home values" to put the Case shiller data into context.

Is everyone familiar with this?