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Priced In Gold, The Median Home Price Is Down 80% In The Past Decade

Tyler Durden's picture





 

It is kind of the fine folks who compile the Case Shiller index to finally "definitively" tell us that home prices have now officially double-dipped (or is that quadruple dipped when one adjusted for the pro forma impact of QE1 and 2?). Well, below is a chart that cuts right through the noise and semantics, and shows that when expressed in a currency that has not been battered and diluted endlessly, the true normalized value of housing is really down 80% not just since the housing peak but since the turn of the millennium.

Median home price priced in gold.

h/t Mike via chartoftheday.com

 


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Mon, 06/13/2011 - 23:51 | Link to Comment Trimmed Hedge
Trimmed Hedge's picture

How about if it were priced in shares of Netflix?

Tue, 06/14/2011 - 00:06 | Link to Comment lopez22
lopez22's picture

or in Apple. These compare-sins have no sense at all, just some playing with numbers...better to calculate with bread&wine...

Tue, 06/14/2011 - 01:02 | Link to Comment JimS
JimS's picture

Or, I suppose you could compare it to Enron stock too, which would make house prices look damn good. Correct?

Tue, 06/14/2011 - 02:17 | Link to Comment What does it al...
What does it all mean's picture

House can be created, Gold can be mined.  

ZH is totally biased.  FYI, check out this disclaimer before you get too upset about the unfair comparisions.   

http://www.zerohedge.com/content/zero-hedge-conflictsfull-disclosure-policy

My favorite counter example for ZH is gold in terms of silver and silver in terms of gold.  

(Makes total sense, in that it makes no sense at all!)

Tue, 06/14/2011 - 05:35 | Link to Comment Tenma13
Tenma13's picture

If I go to my local farmers market they theoretically would accept purchases in gold and silver. If I try with netfilx shares....... losts of laughter. When/if thats dies down most people would feel really sorry of me when they realise I was serious. 

 

 Truth bitchez :P

Tue, 06/14/2011 - 08:37 | Link to Comment TheTmfreak
TheTmfreak's picture

If comparing the "value" of netflix shares is stupid to gold, so is anything else. Its really not that hard to understand market values. Funny, they're all relative. Those who don't take netflix shares as currency don't value netflix shares more than what they would be trading, its really that simple.

It doesn't matter that gold or a house is a "hard asset" rather that its something that people have a demand for (as with anything else). The relative value (supply/demand) of items is without a doubt critical towards understanding a market.

If you price things in other items you being to realize how full of shit the entire system is. Thats my take away.

Tue, 06/14/2011 - 01:08 | Link to Comment Missiondweller
Missiondweller's picture

Not at all. Gold and real estate are durable assets that should keep their value. They cannot be printed or otherwise replicated. Its entriely appropriate to compare the two.

Thanks ZH.

Tue, 06/14/2011 - 01:48 | Link to Comment Libertarians fo...
Libertarians for Prosperity's picture

What if you price gold in Apple shares?

Adjusted for splits, Apple was ~$7 in 2003.  Today it's at ~$325.

Gold was ~$350 in 2003, and today it closed ~$1520.

Priced in AAPL, Gold is down ~90% over the past 7 or 8 years.

Horrible investment!  

LOL

 

Tue, 06/14/2011 - 02:57 | Link to Comment traderjoe
traderjoe's picture

Gold is an asset class. Apple stock is not. Gold v qqq would be an apples to apples comparison.

Tue, 06/14/2011 - 07:06 | Link to Comment Variance Doc
Variance Doc's picture

Moron.  You need to learn about how money works.

Tue, 06/14/2011 - 09:02 | Link to Comment tmosley
tmosley's picture

He's not here to learn.  He's just another dumbshit RNR sockpuppet.

Tue, 06/14/2011 - 05:28 | Link to Comment Djirk
Djirk's picture

bubble math!

Tue, 06/14/2011 - 06:08 | Link to Comment smlbizman
smlbizman's picture

in my worthless opinion, i thought like that also at first, but the two things gold and real estate{dirt} have in common is they will both be here long after everything else is gone. the structure on the dirt is always  losing value every day, unless you think  carpet, shingles and all other components in and of the structure become more valued as their life expectency shortens. copper not included.   

so to compare  dirt and gold seems reasonable, not gold to buildings...

Tue, 06/14/2011 - 04:42 | Link to Comment Ace
Ace's picture

Gold is money.  Shares of Netflix, Apple or whatever are not.

 

Tue, 06/14/2011 - 09:05 | Link to Comment Pladizow
Pladizow's picture

I get a warm feeling inside every time an obviously uninformed comment is made about gold.

Even here on ZH, were you would suspect more intelligence - this is a sign that gold is no where near a bubble.

Keep posting negativity towards gold, i'll keep accumulating.

Tue, 06/14/2011 - 11:17 | Link to Comment Missiondweller
Missiondweller's picture

Ditto that.

Mon, 06/13/2011 - 23:53 | Link to Comment Dejean Splicer
Dejean Splicer's picture

The Median Home Price Is Down 400% In The Past Decade if priced in BitCoin.

~D'jean Splicer

Tue, 06/14/2011 - 00:35 | Link to Comment flacon
flacon's picture

LOL!

Tue, 06/14/2011 - 02:59 | Link to Comment terryfuckwit
terryfuckwit's picture

bitcoin... class

Tue, 06/14/2011 - 08:51 | Link to Comment HoofHearted
HoofHearted's picture

Learn some math. Nothing can be down 400% unless people are giving it away PLUS paying you to take it. So it might get there with the foreclosures...if you'd take a "home" in Detroit.

Tue, 06/14/2011 - 10:50 | Link to Comment boiltherich
boiltherich's picture

Prices would have to drop a lot more than 400% to get me to reside in a house in Detroit.

Tue, 06/14/2011 - 00:07 | Link to Comment fuu
fuu's picture

I find that chart stunning and very disturbing. The dead cat bounce from '74-'79 is sad enough. Then someone kicked that poor dead cat up a hill for 23 years only to have it slide down the other side.

Tue, 06/14/2011 - 00:03 | Link to Comment navy62802
navy62802's picture

The 00 - 10 crash actually resembles the crumbling of faith in the US dollar reflected in the housing crash from 69 - 79, when the US went off of the gold backed dollar.

Tue, 06/14/2011 - 00:08 | Link to Comment mcguire
mcguire's picture

wow, looks like a buy... word is that hfa loans for 3% down are again available..  but then again, the tail risk is in property rights and agenda 21... also there is the tail risk of the second advent...

Tue, 06/14/2011 - 00:54 | Link to Comment JimS
JimS's picture

It's very dangerous to buy property right now. How can you be certain that the house/property you're buying  doesn't have serious issues with the title. Right now is a legal nightmare waiting to happen. Like scary clown dreams.

Tue, 06/14/2011 - 11:00 | Link to Comment boiltherich
boiltherich's picture

Or like me you could find the situation unlivable, unable to sell because of market conditions, uncooperative bank re short sale, and at last find yourself in strategic default onlyto be told by the bank a year and a half later they are cancelling the foreclosure, when you can get them to even talk to you.  I am stuck with this albatross around my neck and even though I moved out more than a year ago not even the bank wants it.  It has not even been colonized by tweekers for god's sake. 

Can't live in it, can't get rid of it, can't insure a house I do not reside in, can't begin to repair credit till it is out of my name, can't maintain it, can't ethically rent it out, maybe the HOA will sue me and it will be their albatross.  It is like one day you are out in the world moving around doing your thing and you take one step wrong and you are a bug frozen in amber, archaeologists will find my perfectly preserved body chained to that goddamned house 4 million years from now.

Tue, 06/14/2011 - 00:11 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Interesting as a game, a little 20/20ish. The thing is, since everything was cut free to float, any such comparison is by necessity left incomplete. It is a zero-sum game, unfortunately, so something else is there, to eat the gains/losses.

How does it look going forward though? In this managed float/sink world, I guess our guesses are as good as each others.

Still believe more in silver by the way and I wonder what the chart looks like in Silver.

ORI

http://aadivaahan.wordpress.com/2011/05/09/population-control-vectors/

Tue, 06/14/2011 - 00:13 | Link to Comment MagicHandPuppet
MagicHandPuppet's picture

I hope the price in gold keeps going down.  I want to trade as little gold as possible for my next home purchase.  Nice chart, and relevant for those whose core position is in gold and silver.

Tue, 06/14/2011 - 00:57 | Link to Comment williambanzai7
williambanzai7's picture

Before people ever decide again that buying a house is a good idea, the next killer question is whether it should be an energy eating monstrosity like all the McMansions sitting out there empty.

Tue, 06/14/2011 - 01:18 | Link to Comment Problem Is
Problem Is's picture

I know! I know!
A 4 bedroom 8 and half bath 4200 sq foot McMansion with virtually no insulation in the desert a 90 mile commute from a job!

Far from being efficient... the housing bubble shows crony capitalism is the most efficient at misallocating resources...

Tue, 06/14/2011 - 01:10 | Link to Comment Destinapp
Destinapp's picture

A useless chart comparing different assets. A chart of how many shares of Citibank does it take to buy an ounce of gold would have shown that gold was overpriced two years ago.

Tue, 06/14/2011 - 02:57 | Link to Comment traderjoe
traderjoe's picture

A useless comment. So gold is overpriced to citi shares? Huh? Huffpo's calling - they want their super-commenter back.

Tue, 06/14/2011 - 09:44 | Link to Comment FEDbuster
FEDbuster's picture

It is relative as long as you price everything in gold to compare values.  Gold's instant international liquidity makes it a world money (unlike APPL or Netflicks shares).  It is in effect the ultimate reserve currency.  The "gold can be mined" comment is true, but the mining of gold has a certian pace and cost that cannot be manipulated (inflated) like fiat currencies.  Even the paper gold market has it's limitations.

Given all that, the chart indicates that it may be a good time to trade some gold for real estate.  The real estate market in many areas is selling at a deep discount to cost of construction.  Gold is selling at a high premium to cost of production.  A "real asset" value investor would take advantage of this current situation by selling some gold and buying some real estate. 

Tue, 06/14/2011 - 01:09 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

Since we're making comparisons, just think what the real price of paying the mortgage has been when held against 10 yr gold. 

This is why usury is a necessary compliment to every fiat system. Usury is a fiat system longitivity tool.

Tue, 06/14/2011 - 01:09 | Link to Comment Problem Is
Problem Is's picture

Excellent Tyler... Now price the S&P for me in GOLD...

Tue, 06/14/2011 - 03:57 | Link to Comment Destinapp
Destinapp's picture

That's my point, if you looked at a chart of gold and Citi two years ago you would have sold gold to buy Citi. My point is that these type of comparisons are "useless" when they have no influence on each other.

Tue, 06/14/2011 - 07:09 | Link to Comment Variance Doc
Variance Doc's picture

It is almost impossible you're that dumb.

Tue, 06/14/2011 - 05:16 | Link to Comment PeaBird
PeaBird's picture

This is why usury is a necessary compliment to every fiat system. Usury is a fiat system longitivity tool.

And with usury now effectively dead, given negative real interest rates around the world for quite a number of years, are you saying the fiat system is on a short timeline?

Tue, 06/14/2011 - 05:54 | Link to Comment ml8ml8
ml8ml8's picture

Good thing my dollar denominated mortgage liability is also down about the same amount over the same period when priced in gold. 

Tue, 06/14/2011 - 06:14 | Link to Comment achmachat
achmachat's picture

more like "neutral" thing. But if your savings were in gold, then it would have been a good thing.

Tue, 06/14/2011 - 08:18 | Link to Comment cabernet
cabernet's picture

Housing prices are going to its natural level reflecting the economic value of shelter. The hesitation in the drop in the price of housing, measured in dollars, shows the power of monetary inflation or lack there of. It arrested the halt for a time, but throwing money at the problem has been no solution. The Case-Schiller is dipping dollar terms as we speak.

http://www.TheAngryGrapes.Com

Tue, 06/14/2011 - 08:29 | Link to Comment Slim
Slim's picture

You know what, screw it.  Housing priced in inflation adjusted 1980 peak gold is up mamouthly because getting my $875ish in 1980s USD requires north of $2500oz today.  And yes, if you assume CPI is govt manipulated and artificially suppressed it's FAR FAR WORSE.  As a matter of fact, we've had nothing but inflation since 1980 and even with the nice rally over the last decade your purchasing power is cut in half and every asset class in the known world performed better BY LANDSLIDE MARGINS...including housing.

And for what it's worth I'm infinitely more bullish on gold than housing but articles like this are rediculous and unworthy of your site.  You need to really think about what you publish.  This article is pure idiocy.  I wonder how housing did against a mint copy of Teenage Mutant Ninja Turtles #1 over the past 10 years?  Enough said.

Tue, 06/14/2011 - 08:43 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Hopefully a home offers some respite from the elements and the outside world, basically a roof over your head.  Now saying that, if one purchased a modest one that was easily affordable and put one's surplus capital into precious metals which do not require paying a property tax, maintenance fees, etc., etc. - one would be far ahead and somewhat prosperous, I would think.  Money is freedom, a McMansion which is superfluous is a form of slavery...

Tue, 06/14/2011 - 10:02 | Link to Comment FEDbuster
FEDbuster's picture

Gold sits and collects dust.  For most investors it just goes up or down in value.  A nice 3 bed , 2 bath rental home (currently priced at $80K in my area) rents for $10K/year less expenses of $3K, it nets $7K/yr.  Gold would have to appreciate 9%/year just to keep pace with the rent from the house (not counting leverage, tax benefits, etc...).  The house could go up or down in value ($80K is below cost of construction), but so could gold.  An asset that produces income vs. an asset that can only go up or down in value.

There is currently a great deal of money flowing into quality real estate rental properties at these discounted prices.  Many are 10%+ deals without leverage, and much higher returns at 50% leverage.

McMansions are dead, but the 1400 sq. ft. rental home in a nice area which can be bought at a deep discount is doing ok.

 

Tue, 06/14/2011 - 09:16 | Link to Comment Pool Shark
Pool Shark's picture

 

For those claiming this post is worthless; stop and think for a moment.

Other than by laboring, how is personal wealth accumulated? That's right: by trading assets. Presumably over-valued assets for under-valued ones. The above chart is indicative of the relative value of two traditional assets over time.

For those willing to study the trend it discloses, it provides valuable information on whether a particular asset is/was over or under valued.

To him that understands, no explanation is necessary. To him that does not understand, no explanation will suffice...

 

Tue, 06/14/2011 - 10:50 | Link to Comment pyite
pyite's picture

Lies, damn lies, and statistics I tell ya!!

If done wrong, these kinds of comparisons are misleading because of the cyclical nature of the gold price.  The price of gold in 1999 went down to the bare zero-profit cost of production, whereas now we are probably heading into bubble territory.

Some kind of long-range moving average would be better; maybe 10 years or more?

 

Tue, 06/14/2011 - 11:14 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

When interest rates were about 16% on a savings account, it would be foolish indeed to put your money in gold unless the 16% was a warm-up to a bout of hyperinflation.  Now that interest rates are about 1%, what do you have to lose?  Rental property does not appeal to me because the people I would feel comfortable renting to, do not need to rent, but I do have my eye on a lovely brick duplex that has been meticulously maintained...

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