US Housing Prices 1890-2010

[Midpack]

Just thought the chart was fascinating FWIW. Home is a place to live first, an investment only in the sense you expect it to appreciate with inflation more or less. Of course there will always be a few zip codes that do much better or much worse...
Real vs Nominal Housing Prices: United States 1890-2010

 

[walkinwood]

Interesting. I've read elsewhere that the long term increase in home values tracked inflation, but a visual is always better.

We're buying a home later this year and our hope that is that its value keeps up with inflation over a 10 year horizon. Our last one did much better than inflation over the 15 years that we owned it, but that's just luck.

 

[Gone4Good]

The good news is that it looks like prices are almost back to trend.

The bad news is that it looks like the slope of the trend line is elevated because of the recent bubble. Although it could just look that way because it's not charted using a log scale.

 

[Gone4Good]

It is a log scale...

I guess I should read titles: US Housing Prices (Log Scale)

 

[audreyh1]

Yes - beautifully rendered chart and with the useful housing history annotations. I love pretty charts!!!! (must be the engineer in me). Anyone else got a copy of The Visual Display of Quantitative Information? http://www.edwardtufte.com/tufte/books_vdqi

Thanks for the link. Quite reassuring.

I can tell you that in our 55+ winter home neighborhood, 2011 was almost completely dead. Very few sales and some spec homes remained empty for a year. 2012, however, has really picked up! Spec homes are all sold and new ones are starting to be built. Something is definitely happening!

Audrey

 

[donheff]

It is reassuring - housing seems to be getting back on track. A lot of people got scared off housing but with rock bottom interest rates it still seems like a no-brainer for young folks. Buy what you can afford (maybe a little stretch), lock in your house payments for the duration at levels that equate to today's rent (or better after the tax deduction), and leverage the small down payment to keep up with inflation on the full price over many years.

 

[NW-Bound]

Barring any personal financial catastrophe, I will not be selling my two homes before I croak. My children will be glad to know their inheritance will keep up with inflation, while I pay to maintain it for them.

 

[W2R]

I am waiting for housing to get back on track in my neighborhood. Just before Christmas it seemed like things were picking up a little bit. But since then, it seems to be getting worse again. Sometimes I wonder if sales volumes will ever increase! But reading the posts of those in other areas is very encouraging. A rising tide lifts all boats, eventually.

 

[bld999]

It is reassuring - housing seems to be getting back on track. A lot of people got scared off housing but with rock bottom interest rates it still seems like a no-brainer for young folks. Buy what you can afford (maybe a little stretch), lock in your house payments for the duration at levels that equate to today's rent (or better after the tax deduction), and leverage the small down payment to keep up with inflation on the full price over many years.

Loan qualification is relatively difficult, in spite of the low rates. You have to have a bunch of ducks lined up and usu. 20% down. I'm sure plenty of people would be pulling the trigger if this hurdle was eliminated.

 

[MichaelB]

The wonkier types can find good data and excellent analysis at Calculated Risk (Calculated Risk) Tom Lawler posts frequently and there is an excellent chart series. FWIW, his view seems to be that housing has stopped declining, has not begun growing, and is in a phase that neither takes away nor adds to the economy in a important way.

 

[bld999]

James Surowiecki in the New Yorker claims to see some "pent-up demand" in autos and housing, pointing out that kids don't want to live with their parents anymore than they ever did.

New Cars, Housing, and Economic Recovery : The New Yorker

 

[tryan]

The last cycle was 12 years in our hood (1987 - 1999). At the end mortgages turned right side up for the first time in over a decade.

Figure we're near the mid-point 6 years in (2006-2012) ... that would/could/should indicate a bottom if history repeats.

Another data point: bought a SF (3 bed, 1 bath) for 42k from fannie. Was leveraged to 213k at the peak (multiple mortgages). the first position was 123k. Yeah we've come down quite a ways.

 

[RetireBy90]

Somehow it doesn't seem correct that home prices track inflation, but the numbers seem to show that. I think that there are a couple other reasons to think that realestate (housing, not comercial) is a good investment:

1) Reasonable leverage, you can borrow $80K on a $100K purchase;
2) Interest rates on homes are normally lower than other secured loans
3) Your house payment doesn't go up like rent normally does.
4) Once you pay off the mortgage, your housing costs can be way below comparable cost to rent.

I know there are lots of other costs like taxes, insurance, maintenance and improvements if you are married :-} I think that the item #3 is important to remember, and item #4 - how many on this board talk about having the house paid for by the time they FIRE ?

 

[ShortInSeattle]

It is reassuring - housing seems to be getting back on track. A lot of people got scared off housing but with rock bottom interest rates it still seems like a no-brainer for young folks. Buy what you can afford (maybe a little stretch), lock in your house payments for the duration at levels that equate to today's rent (or better after the tax deduction), and leverage the small down payment to keep up with inflation on the full price over many years.

Folks in their 20s typically haven't had the best job prospects to build up the 20%and people in their 30's (like me) seem to be pretty anti-buying, feeling like renting is the better deal. The consensus on my facebook feed is that buying is for chumps.

I agree with you though. We bought a condo in July for 2/3 the 2006 price, at a great interest rate. Our neighbors are all far richer than we are, and we feel like we live at the ritz. . I've learned there is good value in buying while everyone else is freaking out.

SiS

 

[W2R]

Folks in their 20s typically haven't had the best job prospects to build up the 20%and people in their 30's (like me) seem to be pretty anti-buying, feeling like renting is the better deal. The consensus on my facebook feed is that buying is for chumps.

Same here, although my daughter and her husband bought in 2010. Luckily, he has a very stable job. However I think it would be very hard for many in their 30's or 40's, working hard on a career ladder, to buy. Being transferred or switching companies seems to be so common during that phase in life.

I agree with you though. We bought a condo in July for 2/3 the 2006 price, at a great interest rate. Our neighbors are all far richer than we are, and we feel like we live at the ritz. . I've learned there is good value in buying while everyone else is freaking out.

Congratulations on your new condo! Sounds like a very good deal on a nice place to live.

 

[Birdie Num Nums]

To me, it seems that owning a condo, or even a house in some areas, is still like having a landlord and rent--when you consider limitations on use/changes and monthly fees imposed by condo boards/homeowner associations and the like.

 

[tryan]

The weird thing about this downturn is that rents have NOT dropped. Last time, rents tanked when your neighbor bought his house for HALF and wanted to steal great tenants. Enticed the good ones to move with lower rents.

Didn't happen - yet - in fact I put thru a rent increase on my 1 vacancy last year.

All of my SF renters could own a house and save about 30% month to month. But they all have credit issues (divorce/forclosure/medical bills ....). And the banks are NOT lending to these types.

 

[donheff]

The weird thing about this downturn is that rents have NOT dropped. Last time, rents tanked when your neighbor bought his house for HALF and wanted to steal great tenants. Enticed the good ones to move with lower rents.

Didn't happen - yet - in fact I put thru a rent increase on my 1 vacancy last year.

All of my SF renters could own a house and save about 30% month to month. But they all have credit issues (divorce/forclosure/medical bills ....). And the banks are NOT lending to these types.

Probably fear of real estate is driving the demand. People are afraid of getting trapped in a bad situation. The horror stories are so prevalent that it will probably take years to normalize. Still, if you expect to stay somewhere for a long time and the selling prices are good relative to rent, it is a pretty safe bet to buy. Even if your house price stays flat for years you are building equity and would be out the payments on rent in any event.

 

[ShortInSeattle]

To me, it seems that owning a condo, or even a house in some areas, is still like having a landlord and rent--when you consider limitations on use/changes and monthly fees imposed by condo boards/homeowner associations and the like.

Certainly depends on the rules in your municipality or condo association. We reviewed a year of condo minutes & budgets before buying, and don't feel restricted at all. Our fees go to things like internet access and cleaning common areas.

I agree it's good to do your due diligence. Some condo associations are the pits!

 

[clifp]

I can tell you that market has bottomed in Vegas.

A few weeks ago I was there attending a conference and once again when looking for rentals. After eliminating some via the internet I saw 8 places and put in offers on 4 (Ya I am not being picky).

These are all single family homes built between 1997-2005 3 or 4 bedrooms, 2+ baths tiny lots, and 1100-1700 square,in ok to move in condition. All are either short sale or bank owned. My offers are all cash with 30 day escrows.

List My offer Result
59K 58K Multiple offer, resubmitted at 62K, competing with 29 offers.
62K 62K 6 offers. Bank counters at 67K accepted the counter still waiting to hear if I got it.
72K 69K Seller accept a different offer over list
83.5 76K Desirable area, but lousy location. 15 offers several offers over list I withdraw.

 

[W2R]

I can tell you that market has bottomed in Vegas.

A few weeks ago I was there attending a conference and once again when looking for rentals. After eliminating some via the internet I saw 8 places and put in offers on 4 (Ya I am not being picky).

These are all single family homes built between 1997-2005 3 or 4 bedrooms, 2+ baths tiny lots, and 1100-1700 square,in ok to move in condition. All are either short sale or bank owned. My offers are all cash with 30 day escrows.

List My offer Result
59K 58K Multiple offer, resubmitted at 62K, competing with 29 offers.
62K 62K 6 offers. Bank counters at 67K accepted the counter still waiting to hear if I got it.
72K 69K Seller accept a different offer over list
83.5 76K Desirable area, but lousy location. 15 offers several offers over list I withdraw.

Wow, these prices sound really good, assuming there is nothing radically wrong with them. Congratulations on finding them! I hope you get those that are still up in the air. Sounds like a lot of competition.

 

[NW-Bound]

If the rent is significantly higher than the monthly cost for a house, and one intends to stay for a while, this is not a bad time to buy.

Funny how people feel secure when they follow the crowd, yet history shows that the contrarian tends to do a lot better.

At the height of the bubble, people were camping out in front of some new subdivisions in San Diego to get on the list to buy a new house.

In Florida, there was a story of such a fortunate early guy, who walked out of the RE office and immediately sold his contract for a condo to another guy who was late in the waiting line, and pocketed something like $75K.

My mother was visited by a friend of hers, who flew in from DC to buy a new home with the intention to flip it. My mother got all excited and told us that we were missing out on all the good deals that out-of-state people were snatching, right under our nose!

Crazy, crazy stuff! Now, people would not want anything to do with owning a house.

Last year, my daughter bought a townhome in a nice area, which is adjacent to a resort and its golf course, for 38% of what the previous owner paid. Oh, and the previous owner put in a nice kitchen and bathroom remodel too!

I told my wife and daughter that when the price was good enough and we found a house that nice, what was the point of waiting for a few more %? So, I strongly encouraged my daughter to buy it (to the point of even giving her the down payment!).

 

[bld999]

I can tell you that market has bottomed in Vegas.

A few weeks ago I was there attending a conference and once again when looking for rentals. After eliminating some via the internet I saw 8 places and put in offers on 4 (Ya I am not being picky).

These are all single family homes built between 1997-2005 3 or 4 bedrooms, 2+ baths tiny lots, and 1100-1700 square,in ok to move in condition. All are either short sale or bank owned. My offers are all cash with 30 day escrows.

List My offer Result
59K 58K Multiple offer, resubmitted at 62K, competing with 29 offers.
62K 62K 6 offers. Bank counters at 67K accepted the counter still waiting to hear if I got it.
72K 69K Seller accept a different offer over list
83.5 76K Desirable area, but lousy location. 15 offers several offers over list I withdraw.

The banks must be hemmoraging there, that's probably half of the cost to build the units, not to mention the land and soft costs....

 

[clifp]

The banks must be hemmoraging there, that's probably half of the cost to build the units, not to mention the land and soft costs....

Well yes, on average I believe Vegas real estate has declined by 70-75% from the peak. My condo I bought for 55K last summer was sold in 2006 for $198k. Plenty of Vegas property is still going for $40 and most everything is still under $60 well below replacement cost.

 

[clifp]

More good news on housing from today's WSJ.

The U.S. housing market, a notable soft spot in the nation's weak economy for the past four years, is becoming less of a drag on the recovery.

Real-estate markets are showing signs of life as falling prices spur buyer demand, lifting home sales and new construction from the depressed levels of the past three years. The spring selling season, traditionally the busiest period of the year, appears to be off to its best start in five years. Sales of existing homes in January and February were at their highest level since 2007, according to data out Wednesday, though sales in February edged down by 0.9% from January on a seasonally adjusted basis. The decline in real-estate prices has slowed its pace, making Americans less cautious about spending and potentially more disposed to buy a home.
For the first time since 2005, investment in residential real-estate, including home building and renovation, has contributed to U.S. economic output for the past three quarters.

More here