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Home Prices Are Back... To 1894's Levels

Tyler Durden's picture


Six years after the onset of the traumatic US housing crisis, the optics are there that suggest a stabilization is occurring. Whether real or manufactured by record-low foreclosures, bank supply withdrawals, and fed-subsidized cash REO-to-rent trades, the sad truth is that jobs (and the GDP-enhancing multiplier effect that they create) are just not coming. Even Bob Shiller prefers the potential for 4% gains in stocks over housing risk in the medium-term as he points out that - inflation-adjusted - house prices are back at levels first seen in 1894... now that is a long-term investor.



Source: Goldman Sachs

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Wed, 02/13/2013 - 23:18 | 3241992 PennilessPauper
PennilessPauper's picture

Now that's change I can beleive in!  LOL

Thu, 02/14/2013 - 00:10 | 3242097 Boris Alatovkrap
Boris Alatovkrap's picture

Two salesman is drive for long in car, must is use bathroom for solid refuse, but in countryside, is no cannot find. Finally, one is stop car get out and go behind tree. Come back in smiles. Other is quandary... ask how is to clean up? Is use dollar! Other is ask to borrow dollar. Go behind tree, come back covered with sh¡t. Other is ask what is problem!? Other is say, you can do better with 3 quarter, 2 dime, and nickel!


That is change to believe in!

Thu, 02/14/2013 - 00:16 | 3242124 SafelyGraze
SafelyGraze's picture

please to more joke of this!

aren't you?  yes, make it!


Thu, 02/14/2013 - 00:20 | 3242135 markmotive
markmotive's picture

Housing is not an investment. It's a place to live.

But when prices go up we all feel smart and rich. That is why Chris Whalen thinks the Fed is blowing another real estate bubble.


Thu, 02/14/2013 - 00:46 | 3242192 r3phl0x
r3phl0x's picture

The Fed doesn't give a fuck about whether you feel smart or rich. They are printing $85B/mo because if they didn't, the US Fed govt would default on treasuries, and then large foreign holders such as China would freak out & US citizens might wake up, realize how hard, fast, and long they've been getting fucked, and finally begin prosecuting the criminal elite responsible for this giant shit show.

The housing, stock, and commodity asset bubbles are basically just side effects.

Thu, 02/14/2013 - 00:46 | 3242207 markmotive
markmotive's picture

They don't care if I feel 'rich' or 'smart' but they care that I go out and spend money on iPads.

Thu, 02/14/2013 - 00:53 | 3242216 r3phl0x
r3phl0x's picture

Maybe a little bit, but mostly, they care that you stay poor enough to have to slave away into old age creating real economic goods/services in exchange for their paper ponzi USD. And remain stupid or scared enough to not question this reality.

Thu, 02/14/2013 - 01:05 | 3242246 markmotive
markmotive's picture

Do people still create anything real in America?



Thu, 02/14/2013 - 01:25 | 3242285 Boris Alatovkrap
Boris Alatovkrap's picture

American Idol is real, no!?

Thu, 02/14/2013 - 02:24 | 3242352 Transformer
Transformer's picture

You are most yes.  American Idol is worship, best most TV show on waves.  Real is to know you must go only sit watch and show.

Thu, 02/14/2013 - 02:57 | 3242374 Boris Alatovkrap
Boris Alatovkrap's picture

In Soviet Russia, is not citizen watch TV, but TV is watch citizen. Ooops, sorry, Boris is confuse British CCTV.

Thu, 02/14/2013 - 09:04 | 3242642 new game
new game's picture

boris come to america and see rerun of homeland.

second time is kinda boring???

Thu, 02/14/2013 - 16:18 | 3244019 AGuy
AGuy's picture

Yes, Boris, must enjoy totalitarianism. Russia & China adopt Capitalism, while US adopts Fascism!

In Soviet Russia, Political enemies were sent to Gulag. In America, America believe in Equal Rights: All of America turned into one Giant Gulag!




Thu, 02/14/2013 - 01:47 | 3242308 Vendetta
Vendetta's picture

pain and suffering ...

Thu, 02/14/2013 - 01:54 | 3242321 Thomas
Thomas's picture

Throw together 4% per annum depreciation and real estate/school taxes on top of that, there is nothing about housing that looks like an investment. You may--MAY--come out whole by including saved rent, but I would be suspect of that claim. You come out OK cause you want to live in a house.

Thu, 02/14/2013 - 03:00 | 3242377 Boris Alatovkrap
Boris Alatovkrap's picture

Thomas, you are words interesting, but why are you, how you say, manifest of large mammalian protuberances in slut T-Shirt!? Are you man or wo-man? Boris confused.

Thu, 02/14/2013 - 03:39 | 3242405 Rubicon
Rubicon's picture

Who gives a crap, enjoy the view.

Thu, 02/14/2013 - 03:51 | 3242414 Boris Alatovkrap
Boris Alatovkrap's picture

As young man, Boris is not so discernment, but once is accidentally proposition to... well, maybe is not place for this story.

Thu, 02/14/2013 - 09:06 | 3242649 Seer
Seer's picture

I hope others appreciate your humor as much as I do.  Humor is as essential as air... well, in this day and age...

Thu, 02/14/2013 - 12:17 | 3243255 Doubleguns
Doubleguns's picture

Humor good, yes, return on ass-eats, no so much.

Thu, 02/14/2013 - 12:17 | 3243256 Doubleguns
Doubleguns's picture

Humor good, yes, return on ass-eats, no so much.

Thu, 02/14/2013 - 08:57 | 3242633 new game
new game's picture

land appreciates(which it is not currently) the structure depreciates. u forgot maintaing this money pit while it ages.

factor this all in and you will better to rent.  plus u will not be wasting time fixing rather than doing fun shit like biking, golfing  and travel.

for the first time figuring taxers i didn't qualify for itemization, so that is out the door.

refi at 3 percent and that is what happened...

two properties - one for sale, when sold next on the market. time to live life...

Thu, 02/14/2013 - 09:12 | 3242670 Seer
Seer's picture

I've got property.  It provides for my heating needs, as well as my "peace of mind"- I, my dog and wife often go for nice long walks.  We raise animals which provide food.  And, property taxes are lower than for most because it's classed as Ag land: it's my contractual agreement that I will not piece out the land to "developers."  Lots of life happening on our property...

Thu, 02/14/2013 - 11:27 | 3243055 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is enjoy apartment in Minsk. Share with in-laws and other two family, but rent is low and when above -40°C, can go for long walk.

Thu, 02/14/2013 - 08:02 | 3242567 Cloud9.5
Cloud9.5's picture

We make lots of bullets, bombs, drones, etc.

Thu, 02/14/2013 - 09:03 | 3242640 Clark Bent
Clark Bent's picture

Also traffic violation surveillance cameras. What a douchebag invention. 

Thu, 02/14/2013 - 00:47 | 3242200 CheapBastard
CheapBastard's picture

As anyone over 40 knows, the RE market right now is a good example of 'The Greater Fool' Theory in action:


The greater fool theory (also called survivor investing) is the belief held by one who makes a questionable investment, with the assumption that they will be able to sell it later to "a greater fool"; in other words, buying something not because you believe that it is worth the price, but rather because you believe that you will be able to sell it to someone else at an even higher price.





Over 40 folks have seen RE cycles which younger may not understand.  I'm a Cheap Bastard so I'll wait until the correction is completed....probably another 40-50% down for most locations. I don't understand why some people get in such a tizzy, almost manic, to lock in a 30 year depreciating asset around their ankles.

Thu, 02/14/2013 - 03:10 | 3242385 RockyRacoon
RockyRacoon's picture

Yeah.  I was just beginning to sell some condos I'd rehabbed in the 1980s.  Interest rates were pushing 20% when I just stopped and rented the bastards out.  Been down some long and winding roads.  This current real estate crap is just another bump in the road.

Thu, 02/14/2013 - 03:14 | 3242390 zhandax
zhandax's picture

It all comes down to location.  We didn't have any doubling in prices here during the boom.  Similar SF in my neighborhood currently sells for about 10% more than I paid in 2004.  At the peak they were selling for about 25% more.  There are currently only two houses for sale in the neighborhood (~100 houses).  There are some benefits to be had in flyover country.

Thu, 02/14/2013 - 06:10 | 3242488 Peter Pan
Peter Pan's picture

The chart is misleading. Prices are actually at levels lower than 1894, the simple reason being that houses today are on average much larger. This skews the results.

Thu, 02/14/2013 - 09:16 | 3242679 Seer
Seer's picture

Also would need to factor in that houses today are a lot more expensive to build.  And don't forget that a LONG time ago (OK, mostly pre 1970s)  there tended to be only a single wage-earner to a given household.

Thu, 02/14/2013 - 13:33 | 3243515 FrankDrakman
FrankDrakman's picture

Geez, is price the only thing people look at? We have a country home that was built in 1910. Plaster over lath, clapboard outside wall, no insulation at all, a cellar that is dark and gloomy, no air conditioning, "central heating" in the sense it has an oil burner in the centre of the living room, single pane windows, all wooden beams (which, after 100 years, rot and sag, unlike, say, steel), etc., etc. It's fine in the late spring/summer/early fall, but come November-March - when we like to use it because it's near the ski hills - it's pretty damn cold at 7 am.

Don't quality, features, and utility count for anything?! 

Thu, 02/14/2013 - 11:30 | 3243069 RockyRacoon
RockyRacoon's picture

Next you'll be applying hedonic adjustments to the prices:  We got them granite tops too!

If you use "a place to live" as the criterion, you have the numbers.

Thu, 02/14/2013 - 11:35 | 3243087 MeBizarro
MeBizarro's picture

Exactly.  'Average home price' is really a shitty indicator on several levels.   I much prefer to see the trend in value/sq. foot but I would highly doubt that is available except in certain urban areas.   

Thu, 02/14/2013 - 09:52 | 3242775 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Totally agree.  Unless the NET cap rate is 10%, it is not even worth the effort.  Rentals are a lot of work because houses depreciate so you are constantly dealing with repairs.  Plus it is a pain in the ass and a lot of risk being a landlord.

Thu, 02/14/2013 - 11:41 | 3243110 MeBizarro
MeBizarro's picture

As long as the renters don't have pets, it's generally fine.  Cats are the worst because cats will inevitably piss somewhere that gets into wood.  You simply can't get rid of that smell and can't refinish the wood.  Why I won't rent to someone that has a cat or dog. 

As for the work, if you can do most of the inside stuff yoursellf and contract with someone or have the tenet shovel/mow the grass for a small fee, it's not that big a deal if you have a 2 or 3 unit property for rent.  Just need to buy a good location, be willing to not waste free time on stupid crap that most people do, and know how to do handiman work yourself.       

Thu, 02/14/2013 - 10:46 | 3242927 thisandthat
thisandthat's picture

Didn't you just broadly described capitalism (ie: profit oriented economy)? It takes a greater fool to make a profit out of anything.

Worth is demand/offer; if there's a profit to be made, it's worth whatever the asking price; if not, it isn't, regardless how cheap it is.

Thu, 02/14/2013 - 10:27 | 3242866 gaoptimize
gaoptimize's picture

Say "Moose and squirrel"

Thu, 02/14/2013 - 00:38 | 3242190 Mr Pink
Mr Pink's picture

Um...yeah...looks like there is something wrong with that link.....oh well, you get the point

Thu, 02/14/2013 - 11:32 | 3242387 RockyRacoon
RockyRacoon's picture

Use TinyURL.com

And you can edit your comment any time before it gets a reply.  Since you replied to your own comment, you locked it up.

Wed, 02/13/2013 - 23:19 | 3241995 DriveByLurker
DriveByLurker's picture

McKinley-nomics will fix the economy.  

Thu, 02/14/2013 - 00:08 | 3242100 Boris Alatovkrap
Boris Alatovkrap's picture

McKinley is kill by socialist agitator assassin, no?

Thu, 02/14/2013 - 08:34 | 3242608 DanDaley
DanDaley's picture

Boris, you are being correct.  American politician are getting liquidated by Democrat/socialist/leftist...peoples who are wanting control of gun -

      -John Wilkes Booth –Democrat (murder of Lincoln);

-Leon Frank Czolgosz –anarchist follower of Emma Goldman (murder of William McKinley)

-Lee Harvey Oswold –leftist/communist (murder of John Kennedy);

-Lynette Alice (Squeaky) Fromme –environmentalist wacko (attempted murder of Gerald Ford);

Sarah Jane Moore –extreme leftist (attempted murder of Gerald Ford);

John Hinkley, Jr. patterned himself after Lee Harvey Oswald (attempted murder of Ronald Reagan)



Thu, 02/14/2013 - 11:30 | 3243068 Boris Alatovkrap
Boris Alatovkrap's picture

Boris  is only one word for description of American Assassin... PATSY!

Thu, 02/14/2013 - 12:40 | 3243348 Withdrawn Sanction
Withdrawn Sanction's picture

Let's not forget, the handwritten death threat sent to Pres Andrew Jackson in summer 1835 (following the veto of the 2nd Bank of the US's charter).  It was later found to have been written by Junius Brutus Booth, father of John Wilkes Booth. 

Jackson had also survived an earlier assasination attempt by Richard Lawrence (another lone gunman) in Jan 1835.  Many then (and now) believe Lawrence was put up to the job by European and Philadelphia banksters, pissed at the veto of the BUS's charter.

Thu, 02/14/2013 - 04:23 | 3242436 Daily Bail
Daily Bail's picture

This is completely ridiculous.  Bloomberg's Tom Keene almost loses it on air.

A Look Inside The Sports Illustrated Swimsuit Issue

Wed, 02/13/2013 - 23:19 | 3241996 FreeSlave
FreeSlave's picture

hmmm...?! should I trust this info, and at least purchase my primary residence? some good advice needed please...

Thu, 02/14/2013 - 00:07 | 3242054 DaveyJones
DaveyJones's picture

considering that everything is yet to unwind and that these are prices with artificially and ridiculously low interest rates that will blow at some point and with an employment picture that will only get worse and a raw resource and energy picture that will only do the same.... 

that said, maybe a small house, well insulated, on some fertile land

Thu, 02/14/2013 - 00:34 | 3242171 r3phl0x
r3phl0x's picture

Once the big 2-3 US banks own and rent-out >50% of the housing market, you better believe that housing prices will always go up, regardless of unemployment or any other metric that should rationally affect prices. The banks have to prevent their renter-serfs from ever buying & thereby partially escaping the long-term USD inflation caused by their buddies at the Fed.

Fuck everything about this shit.

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