Sunday, March 29, 2009

US housing at 1995 levels

Some of you may have seen the graphs floating around the Internet.

Inflation-adjusted US Median house prices have now reached the level they were in 1995!

And since there was a peak in 1979 -those who bought in that year - have seen inflation adjusted median prices drop 1.6%. So if you bought at the peak - housing did not even keep up with inflation after 30 years!

Meanwhile even with the huge drop in stock prices, the S and P 500 is still up 8 FOLD 1979-2009. (though that is not inflation adjusted)

This is to make the point how important it is to buy at the right time. How long do you think it will take for those who bought at the 2007/2008 peak to recoup their investments?


Late breaking news...

REBGV numbers out:


West Vancouver benchmark detached prices down 25% YOY. Down 9% over the last 3 years!

Vancouver West benchmark detached prices down 22.2% YOY. Up 6% over the last 3 years.

Port Moody benchmark detached prices down 34.8% YOY. Down 19.4% over the last 3 years.


Here they are, the best charts on the net.

Thanks Mohican


  1. "How long do you think it will take for those who bought at the 2007/2008 peak to recoup their investments?"

    Great question, and one that is often dismissed by the "real estate always goes up" types.

    I suspect they *never* will recoup their investment on an inflation adjusted standpoint, although it is possible that their grandchildren might.

    If prices increase at 0.5% beyond inflation per year after a 40% price drop, then how long will it take to recover in real terms? About a century?

    Personally, I think 0.5% is about right, although the numbers are still grim using an exceedingly bullish 1 or 2 percent annual increase beyond inflation.

  2. What's my point with this point.

    Just this. Despite what many investment advisors say, it is important to TIME your large asset purchases.

    This could be a house, or evens stocks, bonds or gold (and I am referring to long term holders)

    The best time to buy is:

    1) After there has been a major correction
    2) Once prices start to rise again.

    You may not nail the bottom, but you will have a reasonable chance of asset appreciation.

    The worst time to buy is AFTER a major rise. Better to wait it out than panic and jump on board a train which could be heading off the rails at any time.

    Those who bought homes in 2007/8, unfortunately, may be in a 'no equity' position soon.

  3. Sorry folks lots of typos in that post, had to clean it up.

    First-time-buyer .. had a look at Surrey. Not much to report. Most sales seem to be going for 8-10% under ask, which is already significantly discounted from last year.

    Nice properties for $500-600K. You wouldn't get much in Vancouver for that.

    Why would you buy a shoe-box on the Westside, a small house on the Eastside when you could get a 3000+ foot up-dated (or new house) in Surrey for the same price? There are even areas in Surrey that have views too.

  4. I found this from Ex who posted it on Rob Chipman's blog. Worth having a look at.

    Note the difference between the ask price and final sale price.

    There are many sold for 30-45% off the ask price! Would you have the cojones to offer 45% of the price?

    The abbreviations are the area eg VWDU = Van West Dunbar

    Ex always puts up great data.

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  6. Re: 30-45% off ask: it would be interesting to know if buyers agents were used on those bids...

  7. Thanks fishy. That was nice to know. So Surrey is pretty much at -20% from peak. I think benchmark is a lagging indicator.

  8. I wonder what the market is like for 1million and up properties in the white rock aera? Is wite rock a good place to raise a family or one can expect the same quality of life like in Surrey?
    thanks for the comments