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Originally Posted by ShokWaveRider
Here on the "First Coast" of Florida (Jax to Daytona) prices have come down about 20 - 25% on what they were 1 year to 18 months ago and appear to be still coming down. I think there is still about another 20 - 25% to go personally. But what do I know.
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I found a fairly simple way to predict when prices have corrected to their fundamental value, assuming the bubble started in the year 2000.
1) Download the OFHEO data in excel format from this site: link
2) Calculate the average real appreciation from 1970-something to 2000.
3) Apply that growth rate to an early median price up to the present to determine where prices should be today.
For example, the long-term historic real growth for the Orlando Metro Area is 0.08% -- home values essentially grew at the rate of inflation for 20+ years.
The real (inflation-adjusted) home price in Orlando in 1978 was $128,850. At 0.08% growth for 29 years, the median price should be $131,900 today. So, prices still need to fall about 50% to get back on the historic track.
The average historic real growth for all the US is about 1%. But for some places in CA, it has been as high as 5%.
Here's Orlando:
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