Real-estate rollercoaster

[earthbm_IHB]

For whatever reason serious-looking but clueless people in ties decided that the right way to look at economic data is via a boring 2d static chart.

I like the rollercoaster way much better. It takes away the foolish notions one can have about forecasting the future by extrapolation of a line on a piece of paper (or screen). It also makes the concept of risk more visceral:

(embedded video no longer available)

 

[earthbm_IHB]

Rollercoaster height is from this Shiller chart:

http://www.speculativebubble.com/images/homevalues1.gif

 

[SoCal78_IHB]

Thanks for the chart. If that is where we were as of 2006, where on the scale do we fall today?

 

[earthbm_IHB]

I shouldn't have posted the chart, because the point is in the rollercoaster video.

I believe 2006-to-date index is about 30% down, with 10% more priced in by property derivatives a done deal, so 40% from peak. This puts us around 120 on the chart, or roughly around the upper levels of the previous two booms.

At the risk of being called a serious-looking but clueless (term used by Nassim Talen with respect to bankers) man, credit availability and the inevitable coming unemployment increase mean there is 20% more downside from there (so 30% from "here"), but don't quote me on this.