IrvineRenter_IHB
New member
[quote author="ipoplaya" date=1226146893][quote author="IrvineRenter" date=1226138082][quote author="ipoplaya" date=1226130083][quote author="Roo" date=1226128751][quote author="ipoplaya" date=1226125987]
<a href="http://www.ipoplaya.com/iposhiller.pdf">November has started out with a big average price decline</a>, but the sample is still tiny.</blockquote>
Winter is starting, price drops are coming. Hold on tight, it's cliff diving season!
Before I buy a home, I will need you to IPO/Shiller the home price and see where I land...when I have a deal around 160 I might take it.</blockquote>
Holding CPI constant as of August, a CS index of 175 would gets us to CPI-adjusted parity...</blockquote>
The chart uses 1990 as a starting point which was near the peak of the previous bubble. A more reasonable starting point to project a bottom would be the previous bottom in 1997.</blockquote>
I'll run it back to Jan 1987, which is as far as Case goes back, and see how it looks...</blockquote>
I did that in the book as well. I was so concerned about the accuracy of using Case-Shiller data for projections, that I had to write the following:
"It is more difficult to use an aggregate appreciation rate on the S&P/Case-Shiller indices because there is no single period where a particular average correlates well with market pricing, plus small changes in the rate of appreciation can make large differences in where the bottom is found. There are two issues to be addressed with any projection of appreciation when there is low correlation to the data: the starting point, and the rate of increase. The S&P/Case-Shiller indices did not start collecting data until 1987, but this date is arbitrary. The most recent market low was in 1984, and by 1987, there was some detachment from fundamental valuations. The point of origin for the projection of appreciation may more appropriately be below the first data point in 1987; however, to simplify the analysis, the 1987 data point was used as the origin. The 3.3% rate used in the projections was the historic rate of wage growth from 1987 to 2006. Since people finance house purchases with payments made from wages, this is a reasonable rate to use. Another method that can be used is to assume the very long-term rate of appreciation of 0.7% over inflation. The question then is what rate of inflation should be used. The average rate of inflation from 1987 to 2007 has been just over 3%, but inflation rates have been much higher and more volatile prior to this time. So an argument can be made that 3.7% is a more appropriate number. If this rate is used with the lower origin point to allow for the small degree of house price inflation already evident in 1987, the two support curves differ slightly, but the difference between the two is not significant to the outcome."
<a href="http://www.ipoplaya.com/iposhiller.pdf">November has started out with a big average price decline</a>, but the sample is still tiny.</blockquote>
Winter is starting, price drops are coming. Hold on tight, it's cliff diving season!
Before I buy a home, I will need you to IPO/Shiller the home price and see where I land...when I have a deal around 160 I might take it.</blockquote>
Holding CPI constant as of August, a CS index of 175 would gets us to CPI-adjusted parity...</blockquote>
The chart uses 1990 as a starting point which was near the peak of the previous bubble. A more reasonable starting point to project a bottom would be the previous bottom in 1997.</blockquote>
I'll run it back to Jan 1987, which is as far as Case goes back, and see how it looks...</blockquote>
I did that in the book as well. I was so concerned about the accuracy of using Case-Shiller data for projections, that I had to write the following:
"It is more difficult to use an aggregate appreciation rate on the S&P/Case-Shiller indices because there is no single period where a particular average correlates well with market pricing, plus small changes in the rate of appreciation can make large differences in where the bottom is found. There are two issues to be addressed with any projection of appreciation when there is low correlation to the data: the starting point, and the rate of increase. The S&P/Case-Shiller indices did not start collecting data until 1987, but this date is arbitrary. The most recent market low was in 1984, and by 1987, there was some detachment from fundamental valuations. The point of origin for the projection of appreciation may more appropriately be below the first data point in 1987; however, to simplify the analysis, the 1987 data point was used as the origin. The 3.3% rate used in the projections was the historic rate of wage growth from 1987 to 2006. Since people finance house purchases with payments made from wages, this is a reasonable rate to use. Another method that can be used is to assume the very long-term rate of appreciation of 0.7% over inflation. The question then is what rate of inflation should be used. The average rate of inflation from 1987 to 2007 has been just over 3%, but inflation rates have been much higher and more volatile prior to this time. So an argument can be made that 3.7% is a more appropriate number. If this rate is used with the lower origin point to allow for the small degree of house price inflation already evident in 1987, the two support curves differ slightly, but the difference between the two is not significant to the outcome."
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