How Long Do You Think It Will Be?

[George Hatch]

The further back you go, the shallower the rate of increase.

 

[Joe Flacco]

That's not what I am seeing.

I calculate

4.61% per year from 1915 to 2015,
5.5% per year from 1965 to 2015
3.5% per year from 1990 to 2018.

 

[George Hatch]

i included the illustration to demonstrate the difference between the previous swings in the RE market that were typical vs the highly atypical one in 2007. Regardless of what anyone thinks the value should be today, it is what it is.

Now if you think the 2007 swing was typical and should be considered as part of the baseline for future expectations you're going to treat it differently than if you think it was the outlier and there's still some pressure to return to trend.

Due to unrepeatable changes in household income, tax policy and halving of the mortgage interest rates I don't consider some of the gains attributable to those factors to be repeatable. Then again, I don't believe in the unforeseeable events upon which you are depending to sustain the current trend. But, you could be right - maybe the Vulcans will come to town in 2020 and trade us dilithium crystal energy and warp drive for Jerry Lewis comedies and a teeanaged pop star to be named later.

 

[Joe Flacco]

 

[Joe Flacco]

I think the trend line accounting for TMV probably looks more like this.

 

[George Hatch]

Your line is supposed to be THROUGH all the highs and lows, not outside of them.

I think you are going to need two distinct lines to make your case; a flatter one prior to 2002 and a markedly steeper one after 2002.

 

[Joe Flacco]

Flat lines would only make sense if it was a log scale chart. $20,000 change when the median price changes from $80,000 to $100,000 is not the same thing as $20,000 change when median price changes from $300,000 to $320,000. One is a 20% increase and the other is like 7% or something. That's why the historical trend line should curve up with a standard scale.

 

[TRESinc]

My area and your area....

his post went right over your head...

 

[Joe Flacco]

You guys understand compounding right?

If it was a flat line and price always stays on the line, then that means the rate of change is always decreasing over time.

 

[George Hatch]

Flat lines would only make sense if it was a log scale chart. $20,000 change when the median price changes from $80,000 to $100,000 is not the same thing as $20,000 change when median price changes from $300,000 to $320,000. One is a 20% increase and the other is like 7% or something. That's why the historical trend line should curve up with a standard scale.

The line you've drawn only includes datapoints that actually occurred after 2002. It's completely outside the high-lows you are purporting to measure with it that occurred prior to 2002. The only reason it even looks as close as it does to the bottom end of data is because of the quarterly variations rather than if the line was broken down by year.

Regardless, you're welcome to draw the line however you want. IRL the value trend is going to do its own thing regardless of what any of us think.