Sunday, May 13, 2012

The Path to Infinite Housing Affordability! (Musical Tribute)

Click to enlarge.

I should probably mention that the National Association of Realtors has supplied the information in this chart. They are using a "what do you want your payments to be" debt model. Very shrewd.

Alternate housing affordability indices might factor in the actual price of the homes and the availability of future employment in an increasingly outsourced and/or robotic age. But where's the fun in that?

February 27, 2002
Record Sales Start Year, Says NAR

David Lereah, NAR's chief economist, said low interest rates are only part of the picture and that many other factors are contributing to record sales. "We've had favorable housing affordability conditions for some time, but what's new is the effect of a gradual increase in consumer confidence combined with a turnaround in the economy. As a result, some people who've held back from major commitments over the last few months have entered the housing market," he said.

Click to enlarge.

Behold the gradual increase in consumer confidence!

(It's like a baseball in flight. Literally.)

Click to enlarge.

Gasp in amazement at the economy's turn!

See Also:
Trend Line Disclaimer

Source Data:
St. Louis Fed: Housing Affordability Index (Composite)
St. Louis Fed: University of Michigan: Consumer Sentiment
St. Louis Fed: Real GDP Growth


Troy said...

the previous chart was educational for me, showing how rent of rent inflation was lagging total inflation.

This was expected but nice to see, since my thesis is any non-core inflation may not actually result in pushing up rents any.

I really don't think we have anything to worry about wrt higher interest rates killing housing. TNX is sending a clear signal on that, and that's even without considering the Fed's capacity to monetize mortgages as they see fit.

Japan's game may or may not be playable here,but their 30 year loan is now 2.3%.

As for real disposable incomes:

It was a nice ride.

Stagflationary Mark said...


Check out what what happens if I move the starting point from 1914 to 2000 in that rent cpi vs. overall cpi chart.

I tend to believe in your thesis long-term, but nothing is ever easy.

Stagflationary Mark said...

What what? That's probably an indication that I've stayed up too late watching the European crisis continue to unfold.

fried said...

the European crisis continue to unfold.

Difficult to look away from that train wreck. Spain's bonds are at 6.2% this morning, Merkel 's conservatives were shorn at the polls, EU finance ministers will meet in Brussels to discuss...what??...that they have not already discussed ad infinitum.
We can rely on Europe to do the wrong thing, after they have tried every other wrong thing.

mab said...

Buy now or be priced out forever.

Bondmageddon is just around the corner. The Fed is "printing" money like crazy. "Everyone knows" this.

Heck, even Bernanke refinanced into a long term mortgage. His ARM "exploded". And the all-knowing Hussman claims we're in a "rising interest rate" environment (though not this week).

Troy said...

I think housing did lag the serious inflation in the 1970s, even though the boomers were pushing up housing:

yup. Ford's WIN was a campaign against price inflation, rents were going up but not like everything else.

Stagflationary Mark said...


We can rely on Europe to do the wrong thing, after they have tried every other wrong thing.

Doesn't that just about sum it up!

Stagflationary Mark said...


Bondmageddon is just around the corner.

1. The stock market could quadruple from here!
2. $1,000,000+ to buy GM’s Chevrolet Silverado!

When is that going to happen? Could be tomorrow!

Maybe next week! 2020? 2030? 2050?

Who can really say for sure!

Stagflationary Mark said...


Here's the chart with median sales price for new houses sold.

Rents couldn't keep up with hard assets.

Mr Slippery said...

Sorry to go off topic, but any time I find an exponential trend failure in a chart, and I am too lazy to create a real post about it, I must toss into the discussion.

Total Bank Credit

Stagflationary Mark said...

Mr Slippery,

Here's your chart after it has been run through the Nastinator.

Real Total Bank Credit per Capita (March 2012 Dollars)

Mr Slippery said...

Nastinator? Realified?

Clear failure. I'm going to hide under my bed now.

Wait, I am going to install Diablo III, then go hide under my bed.

Stagflationary Mark said...

Mr Slippery,

Why Diablo III? With an economy like this, I'd think you'd want to play something that is an escape from reality, lol. Sigh.