Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 08-29-2016, 01:58 PM
 
2,170 posts, read 1,936,733 times
Reputation: 3838

Advertisements

I keep reading about how homes are now "in bubble territory" as they're just off their 2007 highs in many areas. But are these numbers figuring in 10 years worth of inflation?

So lets say a house was $400k in 2002 and ran to $550k by 2007 and now 10 years later it is just under $550k. Well if you figure 2% a year in inflation that would put a $400,000 home in 2002 at $540,000 in 2016 just by keeping up with inflation.. So does that really make it "bubble territory"? Shouldn't homes keep up with inflation?
Reply With Quote Quick reply to this message

 
Old 08-29-2016, 07:46 PM
 
Location: New Orleans, LA
1,843 posts, read 3,925,404 times
Reputation: 3366
Good point.


It looks to me like the 2016 CPI-W (inflation used for SS COLAs), is 15.1% higher than the 2007 CPI-W. However, I don't know if this is the best inflation estimate or not. But if it is correct, then your $550K house would need to be almost $633K to include inflation.

Personally I don't regard my home as an investment per se. To me it is just a place to live. I might feel differently if my home was mortgaged to the hilt (but it's not).
Reply With Quote Quick reply to this message
 
Old 08-30-2016, 03:18 AM
 
106,043 posts, read 107,996,739 times
Reputation: 79618
Quote:
Originally Posted by ericp501 View Post
I keep reading about how homes are now "in bubble territory" as they're just off their 2007 highs in many areas. But are these numbers figuring in 10 years worth of inflation?

So lets say a house was $400k in 2002 and ran to $550k by 2007 and now 10 years later it is just under $550k. Well if you figure 2% a year in inflation that would put a $400,000 home in 2002 at $540,000 in 2016 just by keeping up with inflation.. So does that really make it "bubble territory"? Shouldn't homes keep up with inflation?
the cpi converts everyone to a rental formula and home prices get factored in through their rental value. the cpi does not measure asset growth . it only reflects price changes on expenses .

but if you are talking about it from an investment standpoint than , yes real returns on anything are what counts .
Reply With Quote Quick reply to this message
 
Old 08-30-2016, 08:25 AM
 
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,227 posts, read 80,442,347 times
Reputation: 57141
Inflation is not applicable to home prices in desirable areas, it's supply and demand. Our home was at $674k value at the 2007 peak, and dropped to $460k by 2009 in the recession. It's now above $700k, and homes in that price range are selling in the first few days with multiple offers over asking. With great schools, low crime, and accessibility to major high paying employers people want to move here. We currently have several new developments with close to two hundred new homes in the $900k-1.5 million range and those are selling fast too. In 2008-9 there was an entire condo complexes sitting unfinished after the builders went bankrupt. Those had been listed for $600k and up at the time, then the bank finished them in 2011 and they sold in the $300-400k range. Now when an owner sells they are getting $500-700k.

Plateau 228 Townhomes Condo, Sammamish WA - Condos & Homes For Sale
Reply With Quote Quick reply to this message
 
Old 08-30-2016, 10:57 AM
 
9,837 posts, read 4,605,900 times
Reputation: 7292
Quote:
Originally Posted by Hemlock140 View Post
Inflation is not applicable to home prices in desirable areas, it's supply and demand. Our home was at $674k value at the 2007 peak, and dropped to $460k by 2009 in the recession. It's now above $700k, and homes in that price range are selling in the first few days with multiple offers over asking. With great schools, low crime, and accessibility to major high paying employers people want to move here. We currently have several new developments with close to two hundred new homes in the $900k-1.5 million range and those are selling fast too. In 2008-9 there was an entire condo complexes sitting unfinished after the builders went bankrupt. Those had been listed for $600k and up at the time, then the bank finished them in 2011 and they sold in the $300-400k range. Now when an owner sells they are getting $500-700k.

Plateau 228 Townhomes Condo, Sammamish WA - Condos & Homes For Sale
fun story, but local market pricing does not have much to do with real dollars.

inflation always matters.

2000 dollars will have different purchasing power. ie if your year 2000 house cost 100,000 perhaps a basket of goods costs 10,000 if you year 2020 house cost 1,000,000 but a basket of goods now costs 100,000 did you house really go up or did it fall by a factor of ten.
Reply With Quote Quick reply to this message
 
Old 08-30-2016, 01:56 PM
 
7,264 posts, read 4,179,925 times
Reputation: 5464
Quote:
Originally Posted by Hemlock140 View Post
Inflation is not applicable to home prices in desirable areas, it's supply and demand. Our home was at $674k value at the 2007 peak, and dropped to $460k by 2009 in the recession. It's now above $700k, and homes in that price range are selling in the first few days with multiple offers over asking. With great schools, low crime, and accessibility to major high paying employers people want to move here. We currently have several new developments with close to two hundred new homes in the $900k-1.5 million range and those are selling fast too. In 2008-9 there was an entire condo complexes sitting unfinished after the builders went bankrupt. Those had been listed for $600k and up at the time, then the bank finished them in 2011 and they sold in the $300-400k range. Now when an owner sells they are getting $500-700k.

Plateau 228 Townhomes Condo, Sammamish WA - Condos & Homes For Sale

sounds bubbly to me - especially with rates and equities where they are. dollars are just digits on a computer now.
Reply With Quote Quick reply to this message
 
Old 08-30-2016, 02:26 PM
 
106,043 posts, read 107,996,739 times
Reputation: 79618
bubble , you have to love the use of that word.

the reality is just because things went up does not make it a bubble .

in fact investors ran from stocks in 1982. it was a giant bubble they said . after all we went from a p/e of 7 to 12 all in one year . with interest rates in the teens 12 was ridiculous they said .

well little did those pessimists know but that was the start of the greatest bull market in history as things not even on the radar changed the conditions ,parameters and out look .
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top