Houses priced in gold"Houses are NOT expensive. They are actually getting CHEAPER." --Priced in #Gold
MSPUS trade ideas
Inflation Adjusted Home Prices Still HighKeeping an eye on this chart and hoping to buy when home prices fall back down to the support line
Housing DemystifiedResidential housing is a huge asset class so I wanted to analyze it in simplistic format.
I broke up this chart showing the period during the mid-1960's through early 1980's when inflation & interest rates took off and the period during the 40 year long downtrend in interest rates; which ended a couple of years ago. So we have another break in this chart that begins July 2020; most are calling for another period of high interest rates and high inflation. (Only time will tell...but it's no secret that interest rates broke out from the 40 year long downtrend and inflation usually comes in multiple waves)
I also included a log-linear regression channel to help show the long term trend lines.
What I took away from this chart:
1. The common saying that grandparents & parents tell their grandchildren & children..."if only I had kept that house I bought back when I was 25 years old; it would be worth a fortune now" is 100% correct. Residential real estate should be in everyone's asset class just as soon as you can "realistically" afford to purchase it.
2. The period of time where we see a reduction in housing prices or they flatten out has increased in timeframe so someone purchasing their 1st home needs to understand the importance of staying put for a 7-10 year timeframe, especially given the selling costs related to real estate sales.
3. Visually this chart looks to be in a very healthy uptrend
4. Interest rates, while important in computing affordability, has not had as big of an impact in regards to price over time. Under both scenarios prices rose over the long term.
5. The largest drop in housing prices was 20%; otherwise 5-10% or a small flattening period can be experienced.
What's not on this chart:
1. Housing prices are very local so some areas will experience greater downturns while other areas will maintain more stable or rising prices.
2. Perhaps the most important macro point...the myriad of charts showing how right now is the worst time in history to buy a house; in regards to house affordability.
3. The price of your house is not calculated daily, monthly or yearly so most people do not lose sleep over the value of their home unless it becomes unaffordable and you must sell it quickly.
Takeaway: There is no reason to think you are doomed if you buy a house right now. A house is a home and as long as you have stability and can afford it at today's prices then it should always be a consideration. If you are looking for a rental property or Airbnb...make sure you can afford it based upon no occupancy for 6-12 months AND you have plenty of reserves in the bank for repairs.
Lastly, one or the other or perhaps both will happen over the coming years. Either prices come down or wages go up to solve the affordability issue but at some point in time it will no longer be considered the worst time in history to buy a house. Affordability will come back in line with "the norm".
houses priced in goldHouses priced in #gold are NOT expensive.
They can get less expensive if that thick black line fails.
Present and On-Going Forecast Real Estate Market The formula that I worked on for weeks, finally I can put the puzzles together a chart of an ongoing real estate chart and what I provided is an economic formula that's used to adjust the median sales price of houses sold in the US for inflation and mortgage rates. Here's what each part of the formula means in more detail:
MSPUS: This variable represents the median sales price of houses sold in the United States. The median sales price is the price at which half the houses sold for more and half sold for less.
MORTGAGE30US: This variable represents the average 30-year fixed rate mortgage in the United States. A mortgage is a loan that people take out to buy a house, and the interest rate on the mortgage can affect the overall cost of the house over time.
USCPI: This variable represents the United States Consumer Price Index, which is a measure of inflation. Inflation is the rate at which the general level of prices for goods and services is rising, and it can affect the value of money over time.
The formula itself is a bit complicated, but it's essentially using these variables to adjust the median sales price of houses sold in the US for inflation and the impact of mortgage rates. Here's how the formula works:
1+MORTGAGE30US/100 calculates the interest rate on the mortgage, expressed as a decimal.
^0.08333 raises this interest rate to the power of 0.08333, which represents the monthly interest rate.
1+MORTGAGE30US/100)^0.08333-1 calculates the mortgage payment factor, which is the amount by which the median sales price of houses sold needs to be adjusted based on the mortgage interest rate.
1/(1+MORTGAGE30US/100)^0.08333 calculates the present value of the mortgage payments.
(1-(1/(1+MORTGAGE30US/100)^0.08333)^360) calculates the total value of all of these mortgage payments by taking the present value of each payment, summing them over the 360 months of the mortgage, and then subtracting that sum from 1.
USCPI*300 adjusts the value of the expression by the consumer price index multiplied by 300, which accounts for the effects of inflation over time.
MSPUS is then multiplied by the result of steps 3, 5, and 6 to calculate the adjusted median sales price of houses sold.
When you put it all together, the formula is a complex expression that takes into account mortgage rates, inflation, and a value in US dollars, and calculates a value that has been adjusted by these factors, By using this formula, you can get a more accurate picture of the real cost of buying a house over time, which can help them make more informed decisions about the housing market.
The formula that I worked on for weeks, finally I can put the puzzles together a chart of an ongoing real estate chart and what I provided is an economic formula that's used to adjust the median sales price of houses sold in the US for inflation and mortgage rates. Here's what each part of the formula means in more detail:
MSPUS: This variable represents the median sales price of houses sold in the United States. The median sales price is the price at which half the houses sold for more and half sold for less.
MORTGAGE30US: This variable represents the average 30-year fixed rate mortgage in the United States. A mortgage is a loan that people take out to buy a house, and the interest rate on the mortgage can affect the overall cost of the house over time.
USCPI: This variable represents the United States Consumer Price Index, which is a measure of inflation . Inflation is the rate at which the general level of prices for goods and services is rising, and it can affect the value of money over time.
The formula itself is a bit complicated, but it's essentially using these variables to adjust the median sales price of houses sold in the US for inflation and the impact of mortgage rates. Here's how the formula works:
1+MORTGAGE30US/100 calculates the interest rate on the mortgage, expressed as a decimal.
^0.08333 raises this interest rate to the power of 0.08333, which represents the monthly interest rate.
1+MORTGAGE30US/100)^0.08333-1 calculates the mortgage payment factor, which is the amount by which the median sales price of houses sold needs to be adjusted based on the mortgage interest rate.
1/(1+MORTGAGE30US/100)^0.08333 calculates the present value of the mortgage payments.
(1-(1/(1+MORTGAGE30US/100)^0.08333)^360) calculates the total value of all of these mortgage payments by taking the present value of each payment, summing them over the 360 months of the mortgage, and then subtracting that sum from 1.
USCPI*300 adjusts the value of the expression by the consumer price index multiplied by 300, which accounts for the effects of inflation over time.
MSPUS is then multiplied by the result of steps 3, 5, and 6 to calculate the adjusted median sales price of houses sold.
When you put it all together, the formula is a complex expression that takes into account mortgage rates, inflation , and a value in US dollars, and calculates a value that has been adjusted by these factors, By using this formula, you can get a more accurate picture of the real cost of buying a house over time, which can help them make more informed decisions about the housing market.
