Tuesday, March 11, 2008

Shiller on Long Term Home Prices

Here's an amazing chart from a Robert Shiller paper (Long-Term Perspectives on the Current Boom in Home Prices) that has been making the rounds.

This is a chart of real home price indexes for the U.S. 1890-2005, Amsterdam 1628-1973, and Norway 1819-1989.

Note that the price indexes for Amsterdam and Norway end well before the U.S. data series, and so their current real estate bubbles not visible in the chart.


Anonymous said...

SPF building specs knowing it will lose money on the sale. By intentionally dumping inventory on the market it is lowering the value of potentially thousands of homes for every home affected by the comp sale. By continuing to build specs and wilfully dumping inventory, it is costing the State of California and thousands of Californians untold damages.

All the while management if giving itself millions in bonuses for such destructive behavior. Other than management, few are benefitting from this malicious conduct. Shareholders have seen the value of their company evaporate. Creditors are watching their security liquidated. Each time a new spec is liquidated, surrounding homeowners are getting a lower comp forced down their throats.

How much damage will the State of California permit SPF to continue wreaking each time it builds new specs. For what? So executives can continue to get inflated salaries and millions in bounuses as they fire hardworking employees.

We have anti dumping laws. The laws are on the books because the behavior can destroy an American industry. The issue is whether those laws can apply to an American company building and dumping inventory contributing to the destruction of value for an untold number of Californians?

In the meantime, just count the number of spec homes SPF is building compared to its backlog. See if another public homebuilder comes close. It would be interesting to get an expert and quantify the aggregate dimunation in value that has resulted from SPF dumping inventory at a loss.

At this point, it will be up to the California legislature and prosecutors determine if the behavior is improper. In the meantime, SPF continues to build and dump specs at huge losses.

Anonymous said...

I notice you didn't put any of the EU Bubble Cities in the chart. I imagine Outer Mongolia has held up better as well.

Anonymous said...

Ireland is looking juicy right now. I would buy all the real estate I could there since there's no bubble in the EU. LOL!

Anonymous said...

For up-to-date US, see last chart here
"Real Dow & Real Homes & Personal Saving & Debt Burden" at

Anonymous said...

Hey Bubble,
ARE YOU STILL SHORT ON AXR ? What is your view ?

GS751 said...

A lot of this goes back to Soro's theories of Reflexivity.


CP said...

I was never actually short AXR - could never borrow it.

I don't follow it, either. I was surprised to see that it has run up so much. So has JOE!

They may not be making any more land, but there sure is enough of it.

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