Skip to main content

Inflation adjusted home prices (US)

This chart of US inflation-adjusted home prices caught my eye as I leafed through Investment Postcard's recent, "Words from the wise", roundup.

As you'll note from looking at the chart above, we are currently in the midst of a sharp correction from the near-parabolic highs reached during this decade's "housing bubble". From the peak in 2004 to the most recent low (just below $170,000), we see a decline of around 50 percent in the median home price.

If this were a stock chart, we might note that the most recent low also violated a line of long-term support (drawn in red) at the $170,000 price level. This is the level from which home prices "broke out" in an advance above their previous highs beginning in the mid-1990s.

Assuming this type of chart inference is applicable to real estate prices, can we expect median home prices to return to their previous "trading range" of $145,000-$170,000 in inflation adjusted terms?

In any case, I felt the chart provided an excellent (and long-overdue) update to one of our original posts on home prices: Robert Shiller's study of US housing price data. Enjoy the look back (to the uncertain days of the bubble top) and the current data, with its implications for what may lie ahead.

Related articles and posts:

1. Single family home prices (inflation adjusted) - Big Picture.

2. Parsing the recent housing data - Finance Trends.

Popular posts from this blog

Market Wizard, Steve Clark on Trading: Grow Your Equity Curve

Trading wisdom recap: Steve Clark , founder of Omni Partners, was featured in Jack Schwager's 2012 book, Hedge Fund Market Wizards .  Clark's interview with Schwager provided us with some valuable trading insights; "Lessons from Hedge Fund Market Wizards: Steve Clark" was one of our most popular posts ever. If I had to pick my favorite sections from Clark's chapter, it would be boiled down to these two concepts: "Do more of what works (and less of what doesn't work)" and "Manage your equity curve". Here's his full quote on the supreme importance of growing your equity curve :  "Your job as a trader is to make the line of your equity curve go from bottom left to top right. That's it. Don't get hung up on other supposed "mandates". Protect your capital and the direction of that equity line. "   I will leave you with one last series of quotes from Steve Clark's interview with Jack Schwager. ...

How to "Pull the Trigger" on Your Trading Ideas

In our last post, I quoted hedge fund manager, Jim Leitner on the importance of following up on your investment ideas.  Today I'd like to follow up and share some thoughts on how you can learn to consistently "pull the trigger" on your best trading setups and investing ideas. In order to help you do that, we'll take from the best and offer up key insights from interviews with top traders and trading psychologists like Alan Farley, Brett Steenbarger, and Doug Hirschhorn .  Now before we get to their key insights on overcoming trading anxiety and pulling the trigger on your trading ideas, let's remember what Jim Leitner said in his interview: "Learn to love to listen to people and when you hear something interesting, follow up on it. Don't just think, "Well that's an interesting idea" only to find out a year later that the company you could've bought shares in is now up 500-fold. You never want to say woulda, coulda, shoulda...

Seth Klarman: Margin of Safety (pdf)

Welcome, readers! Signup for free email updates at the Finance Trends Newsletter . Update: PDF links removed due to DMCA notice. Please see our extensive Klarman book notes below. New visitors, please check the Finance Trends home page for all new posts. Here's something for anyone who has been trying to get a look at Seth Klarman's now famous, and out of print, 1991 investment book, Margin of Safety .  My knowledge of value investing is pretty much limited to what I've read in Ben Graham's The Intelligent Investor (the book which originally popularized the investment concept of a "Margin of Safety"), so check out the wisdom from Seth Klarman and other investing greats in our related posts below. You can also go straight to Ronald Redfield's Margin of Safety book notes .    Related posts: 1. Seth Klarman interviews and Margin of Safety notes     2. Seth Klarman: Lessons from 2008 3. Investing Lessons from Sir John Templeton 4. ...