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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DaveyJones's picture

good points but exponential math will ultimately beat corruption and lies

and when it blows, and because there is no honor amongst thieves, bankers will, for at least a brief and very angry moment in history, slip

A Nanny Moose's picture

I keep waiting for those bond vigilantes. Perhaps they were burned at their own stakes?

Seer's picture

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

Check!

Also, and this is a "free" tip: be sure to orient toward/away from the sun as pertains to your location (heating/cooling energy requirements).  I cannot over-stress the importance here.

Prices can go down, but it's likely going to come at the expense of increased interest rates.  Unless one is cashing out* it'll wash the same as with higher prices and lower rates. * If you cash out you don't have the ability to write off mortgage interest; you also lose out on the possibility that one day the mortgage collector may not show up- let the banks carry this risk; not cashing out also means you've got $$s for acquiring needed additional assets (I opted for a tractor and other equipment; also needed $$s for various repairs).

Non-landlubbers exempted/not applicable.

Never One Roach's picture

Yes. There has never been a better time then now to lose money in RE.  These prices won't last long, so better grab one fast, before the price drops.

ebworthen's picture

Somewhere that housing is at 1869 levels, with water, arable land, and where you can build fences and have big dogs, chickens, and some goats.

Be sure and stock up on firewood, guns, ammo, and knowledge.

Some whiskey and a good Woman wouldn't hurt.

Shoot trespassers first, ask questions later.

Seer's picture

Make sure you have good neighbors.

WTSHTF is no time to make the move.

About goats... be prepared to spend money on fencing!  (for containment AND for protection- if they aren't trying to kill themselves it's something else that is!)  I'm still undecided whether I want to go down this path (use them, which will require $$s for fencing and care, or use my tractor to clear brush, which will cost me my time and some $$s).

I don't drink (my personal self-imposed choice- I'm only laid back when I'm busy [otherwise I'm doing a ton of thinking] :-)  ).  But... all that is made up because my Woman is more than "good" :-)

Eireann go Brach's picture

And all the realtors will post this on their facebook page tomorrow and tell everyone it is a good thing!

Buck Johnson's picture

No kidding, they are doing everything to make it seem bad news and bad data is good data.  They know that the implosion is coming but they aren't allowed to tell people any bad news.

FEDbuster's picture

I heard one of their retarded commercials the other day stating that the kids of people who own homes get better grades than the kids who's parents are renters.   They went on to talk about stable environment, etc...  They will say and do anything to pump this market back up.

Bunga Bunga's picture

"It can't go lower from here, the bottom is in!"

Transformer's picture

And prices could only go up from this point, but it might still not be the bottom.  all depends on real inflation.

Rustysilver's picture

Please check Detroit. thanks

Freddie's picture

I bet a lot of realtors will get facelifts, Mercedes leases and boob jobs by closing a few deals with this report. 

Seer's picture

My real estate agent (she sold my "city" home and facilitated the purchase of my rural home) doesn't belong to NAR.  She knows better... (and I don't believe she has an FB page).

holdbuysell's picture

John Williams' Shadowstats weighing in on this with the CPI adjustments made since the 80's will show these to be lower. Would be interesting to know how much lower.

Bunga Bunga's picture

What about wages adjusted for inflation?

And 100 is not a rock hard bottom. It can go down to 50.

TotalCarp's picture

This is total bollox until they explain what they used to adjust for inflation. There werent any ipads in 1896 as far as i can remember.

unless they add housing in gold/silver/platinum basket terms or housing in equity terms charts this is about as meaningful as the rest of their vampire squid drivvel.  

TahoeBilly2012's picture

Wait Tyler's don't start comparing a Sear's Craftsman cut and shipped a hundred years ago with a chinese drywall "Home Depot special" built by amigos today, I will gladly take the the 1894 peak home but new today!

Bunga Bunga's picture

but but but the chinese drywall home comes with three flatscreen TVs (made in China).

otto skorzeny's picture

the wood was good 100 years ago but the rest of the house was shit

ebworthen's picture

LOL

"Good wood", yeah, what she said.

Rather have good wood than crappy composite shit and a fucked up crazy ass suburban neighborhood.

babylon15's picture

Can't wait till stocks are back to 1894 levels.

r3phl0x's picture

I know the hyper-inflationists have been wrong for the past 4 years, but a deflation of that scale is simply not possible with Ben at the Fed. If you think $85B/mo is crazy, wait until you see what he does if the US stock market has a 30% down day. It would just provide an excuse to print even more money and enable an even larger Federal deficit. Obama could create a society with, say,  60% takers instead of the 47% or whatever it is now. Takers are by far the most reliable voters in a democracy.

AlaricBalth's picture

Joseph Schumpeter discusses the exact political-economic devolution, of which you mention, in his book Capitalism, Socialism and Democracy. If you haven't read it, I recommend it highly.

From Wiki:

"Schumpeter's theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism; it will be replaced by socialism in some form. There will not be a revolution, but merely a trend in parliaments to elect social democratic parties of one stripe or another. He argued that capitalism's collapse from within will come about as democratic majorities vote for restrictions upon entrepreneurship that will burden and destroy the capitalist structure..."

r3phl0x's picture

Thanks - I'm a big fan of his, but haven't read the book yet.

Seer's picture

It's an issue of growth decay, which is a certainty (finite planet being the ultimate bounding parameter).  Capitalism is great for opening up the champaign bottle, but as it gets emptier the time comes when conservation starts to trump it- and, paradoxically, "socialism" becomes "conservatism" (through increased control)*.

* Are the Amish socialists or capitalists?

I don't see this so much as being sinister as it being an inescapable fact of life/reality (the path that growth leads to).

gaoptimize's picture

Internally or externally?  Externally, capitalists.  I have pictures.  Internally, I don't know.

Water Is Wet's picture

If you bought oil and gas land (with like a little bitch ranch house) in 1894, you are at fucking filthy rich asshole levels.

FEDbuster's picture

Location, location, location....

My friend's parents bought a 1600 sq ft ranch home in Cupertino in 1965 for $18K, sold it in 2005 for $975K.  I'm sure they beat the chart above.  Location and timing are everything.

Spaceman Spiff's picture

That is about 10 minutes from where I live...

 

I'm so pissed he is considering this area to move to in the future post presidency.  I was looking forward to him fading away in chicago and not having to see news about him daily.  Good luck with the celebutard worshipping press around here.

 

As for Linamar, it is a foreign company that got a bunch of sweet heart deals from the local, state, and federal government.  Perhaps if they were business friendlier in the first place, we would not have gone through the Volvo departure...

francis_sawyer's picture

Californy is the place u ougtta be... Swimmin pools... Movie Stars...

Osmium's picture

nuthin better they lying around by the Ce-Ment pond.

otto skorzeny's picture

WOW-4% possible upside in stocks with a potential 50% or more downside-that's a bet I'd love to take. Instead-why don't I take my $ and throw it down on one of that hebe Sheldon Adelson's gambling tables? Fuck you Bobby Baby and all of your East Coast elite Ivy League Ivory Tower soddomite buddies.

gaoptimize's picture

Follow the yellow brick road!

Tsar Pointless's picture

I have a brick...house. Low monthly mortgage. Lower than the rent I was paying on my last apartment. At this point, MUCH lower than it would be.

I have a car loan that is a year away from being paid off. Only a few thousand in credit card debt.

Sure, I live in hell - aka, Pittsburgh. But it is "cheap" here. So are most of the people, so you get what you pay for, I know.

Steelers, Penguins. Blah blah blah. Proles are so easily entertained.

But it keeps me "in the game", so to speak.

Freddie's picture

No - Philadelphia is hell.  Pittsburg is not as bad as Philly.  Some of the people in Pittsburgh are decent.

Cabreado's picture

I don't live there, but Pittsburgh gets a bad rap.
Don't beat yourself up for living where somebody else decides it sucks.

I know people that love it.

It's not where you are -- it's what you're doing, and who's with you along the way.

Lucius Cornelius Sulla's picture

Forget housing, a leveraged bond portfolio with unlimited free dollars would be awesome!  Where do I sign up?

Theta_Burn's picture

Materials costs will set the bottom.

Soon, with all these vacant homes, the copper piping won't be the only thing that will disappear,  I foresee 2x4 and oak flooring salvage yards springing up everywhere soon..

Freewheelin Franklin's picture

Copper? Nobody uses copper. It's all that PEX shit. May as well use garden hoses.

 

No more 2x4s, either. Galvanized metal studs. And oak flooring? Factory finished shit.

 

I'm working in a house now that's about 80 years old. It has all solid mahogany doors throughout the house. I told the guy to replace them with that masonite shit and sell them. He'd make more money from selling the doors than selling the house.

Seer's picture

Copper over PEX?

I'd take PEX-A any day.  Less concern over rupturing pipes from freezing.  Less concern over corrosion.  AND, you generally don't have to worry about someone ripping your PEX plumbing out of your walls: well, when one gets hard up for $$s in the future I suppose that one could rip out the copper themselves, but this starts to nullify the value as pertains to initial function.

"solid mahogany doors" Kind of hard to make new ones these days for sure.  Internal use fine, but external solid wood doors suck (rented a home with them and the things would swell up and bow, making sealing a bit tough).

Drunken Monkey's picture
Home Prices Are Back... To 1894's Levels

Which is as it should be, because a house is not an "investment" that should be expected to increase in value, it's a durable good like a car or a stove that should, if properly maintained, be expected to slowly loose value, all other things being equal.

Seer's picture

There are TWO components: anyone who pays property taxes should be aware of this.  The land, and the "improvements."

A "house" could be a financial investment if you are able to rent it out (in whole or part), though this is clearly like any other business activity- highly dependent upon your business model (market and cost controls etc).  Land, however, can more readily be an investment, especially if raw and or ag.

trillion_dollar_deficit's picture

Wait until the Fed pulls the rug out of the bond market and the 10 yr mean reverts to 6%. 

The rule of thumb Ive always used is $10k in home value per 100 bps swing in rates.