Earlier this week, I put up an Inflation-Adjusted Chart of Gold. This showed that current prices aren’t really as high as some think. Today we are doing the same thing with Housing Prices. Real Estate performance, believe it or not, is even worse, in real terms, than the what nominal prices lead you to believe.
*Nominal values are expressed in money terms (that is, in units of a currency) in a given year or series of years. By contrast, Real value adjusts nominal value to remove effects of price changes over time (by adjusting for inflation).
From Pragmatic Capitalism:
For some perspective on the all-important US real estate market, today’s chart illustrates the inflation-adjusted median price of a single-family home in the United States over the past 41 years. Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased — increased. That brings us to today’s chart which illustrates how the inflation-adjusted median home price is currently 38% off its 2005 peak. That’s a $100,000 drop. In fact, a home buyer who bought the median priced single-family home at the 1979 peak has actually seen that home lose value (8.5% loss). Not an impressive performance considering that more than three decades have passed. It is worth noting that the median priced home is currently in the bottom half of a price range that existed from the late 1970s into the mid-1990s.
I’ve been trained for years to look for trends in prices. No training necessary for this one.