Click to enlarge

Source: J.P. Morgan


I am off to present to a room full of advisers this AM, but before I leave to tell them precisely where the Dow, Nasdaq and S&P will be in 12 months (to the 2nd decimal place!), I wanted to show the above housing charts.

The three charts show that prices are off the lows (IMO courtesy of ZIRP/QE), Renting remains pricey versus owning, while Inventory is very low.

Back soon . . .


Category: Data Analysis, Real Estate

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “Datapoint: Aftermath of Credit/Housing Bubble”

  1. Chief Tomahawk says:

    How about a chart of the pool of private equity available to invest by year? Evidently a fair amount of that has gone into our housing market besides stocks and bonds.

  2. JC in Va says:


    I know you are a fan of the median income to median home sale price ratio. Haven’t seen that in a while. Is that data point trend telling us anything?

    Have fun in Denver. Wish I could have made it.

    • Homes are now fairly valued

      They ever managed to overshoot to the downside — thats where all of the great value buying opportunities come from, the careen past median to deeply oversold.

      So far, that has not happened.

  3. murrayv says:

    While the above curve says as of 6/30/13 I suspect the monthly mortgage payment is calculated with data no later than the end of May. The current mortgage payment is probably about as high as the rent. Does anyone have current data? Murray

  4. Livermore Shimervore says:

    while I understand the need to compare monthly rent vs mortgage payments strictly for comparison purposes it is problematic for big picture perspective. As Mr.Schilling points out these renting vs equivalent property mortgage paymEnts almost never include the costs to own which are swelling rapidly as local taxing authorities reasses home values amid increasing prices resulting in sharply increased ownership costs. These costs represent significant sums of earned middle class income, sums that have a real impact on reduced consumption. These charts should include a third dotted line “real cost to own.” otherwise these type of charts become propaganda tools for the RE lobby who undoubtedly have their sales minions pushing these one dimensional data points on the unsuspecting public.

    • Alpha Sloth says:

      Exactly Livermore.

      Further to the point:

      Renting is a small fraction of the monthly carrying costs of a mortgage. Worse yet, the cost to build is fractions less than resale housing at current massively inflated prices.

  5. capitalistic says:

    Fantastic chart. Rents > Mortgage would assume that we’re in a sellers market, but it’s still a buyers market, in my opinion. Perhaps things will change once/if interest rates increase.

  6. Livermore Shimervore says:

    Sellers market only if you:
    1- live in a zip code where avg income and FICO scores are high.
    2- live in a zip code where private equity investors have priced out all middle income couples looking for starter homes.

    #2 bothers me if this toppy stock market takes a tumble with a simultaneous jump in rates . From what I understand to be the case, PE funds inherently desire to ring the profit register as quickly as the investment is committed — always chasing up S&P performance. A bird in the hand situation when the clouds get dark. This could be disastrous for communities where incomes have not risen since the crash but Wall Street money has prop’d up home values into double digit territory. i.e. the middle-income swaths of CA, FL, AZ, NV, etc. The higher end zip codes won’t feel a thing and will be happy to have refi’d at steal rates.

  7. theLorax says:

    House price to income ratios are currently very high compared to historical norms in many markets. That such high prices are “affordable” is a function of the abnormally low mortgage rates courtesy of ZIRP and Ben’s wealth transfer program from those holding fixed income investments (retirees) to debtors and other insolvent entities. If rates rise those prices will again be unaffordable unless Ben chooses inflation and even more monopoly money is created to complete the illusion of a prosperous FED engineered recovery. If QE stops and no inflationary period then rates rise and getting into a house at a good payment today might mean that you’ll be staying there for a long time (whether you want to or not). Will Ben continue to destroy the well-being of retirees to keep the illusion going for everyone else? Or do you believe in mean reversion for this asset class as you do for other asset classes?