Friday, October 24, 2014

Bonus Exponential Trend Failure of the Day: New Home Prices vs. Hourly Wages

The following chart shows the median sales price for new houses sold divided by the average hourly earnings of private production and nonsupervisory employees. The result shows the number of hours the average production and nonsupervisory employee would need to work to pay for the median new house with cash.

Click to enlarge.

The exponential trend in red failed big time, not that many seem to notice or care. So what happened to the missing 1,400 hours of labor in September (in order to stay on the unsustainable exponential trend)? Well...

Seriously. As seen in the chart, didn't we already go through this once? Housing bubble? Hello?

Source Data:
St. Louis Fed: Custom Chart


mab said...

in order to stay on the unsustainable exponential trend

Unsustainable? You keep using that word. What gives? Don't you believe the official propaganda?

Stagflationary Mark said...


As I told you, it would be absolutely, totally, and in all other ways unsustainable. No one in Guilder knows what we've done, and no one in Florin could have gotten here so fast. Out of curiosity, why do you ask? ;)

midwesterngirl said...

It is rather inconceivable, isn't it?

Stagflationary Mark said...


I thought it fitting considering the rocky terrain.

Joseph Constable said...

This is a good thing. Prices belong below the blue line. That is where they are sustainable.

dearieme said...

Six years earnings to buy a house isn't bad. Pity about the income tax, though.

Anonymous said...

Do wages include total compensation ? If so I'd like to see
the chart with benefits stripped out.

Stagflationary Mark said...

Joseph Constable,

You'd think it would be easier to sell houses if they were cheaper. Of course, if you thought that way then you probably wouldn't be responsible for monetary policy, lol. Sigh.

Bubbles, bubbles, toil, and trouble!

Stagflationary Mark said...


Yeah, the income taxes take a bite, as does the cost to maintain the house, the property taxes each year, the insurance, the furniture, the utilities, and so on.

Stagflationary Mark said...


I don't believe either benefits or payroll taxes are included.