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Click to enlarge.
Four Simple Red Trend Questions
1. Is it good that the trend is decaying over time?
2. Why is the trend getting more volatile over time?
3. Although the trend is widening, why couldn't we stay in it?
4. How bad would another failure to the downside be?
Four Simple Blue Trend Questions
1. Is the trend's 14.5% growth rate sustainable?
2. Do you think we'll make it to 70% by 2016?
3. Can we expect anything bad to happen when the trend fails?
4. Why didn't I include 2014:Q2 when making the trend?
Four Simple Red Trend Answers
1. No.
2. Financial instability is increasing.
3. Gravity.
4. Very bad.
Four Simple Blue Trend Answers
1. No. The trend is guaranteed to fail when 100% equity is achieved.
2. No.
3. Yes.
4. As seen in the following chart, the blue trend failed.
Click to enlarge.
Your answers may differ. This is not investment advice.
Source Data:
St. Louis Fed: Households; Owners' Equity in Real Estate as a Percentage of Household Real Estate
4 comments:
Equity is just a concept.
Sporkfed
1. For those with highly leveraged and rapidly growing home equity, it is a get rich quick scheme.
2a. For those with highly leveraged and rapidly falling home equity, it is a get poor quick scheme.
2b. For those with negative home equity (owe more than the house is worth), it is a mobility anchor.
I really don't think we can permanently rule out 2a and 2b from here, even with ZIRP.
Local house prices mean that our pleasant but unexceptional 1920s suburban house is worth more than a million US dollars at the current exchange rate. Bonkers. It's an effect that ripples out of London, added to local prosperity based on science-and-technology.
It doesn't immediately matter to us since we have no intention of moving until old age impels it. It may matter to our heirs, in the unlikely event that Inheritance Tax doesn't snaffle much of it.
dearieme,
Local house prices mean that our pleasant but unexceptional 1920s suburban house is worth more than a million US dollars at the current exchange rate.
Nice. You've got me beat by a factor of two, although if mine goes to a million the property taxes will force me out more than likely. So I'm not convinced I should actually root for it. Go figure.
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