Chart of the Day – Declining real estate prices continue to be a concern for investors. But with the weakening U.S. Dollar, it is difficult to consistently get the Real value of residential real estate. For some perspective on the magnitude of the decline in home prices over the last decade, today’s chart presents the median single-family home price divided by the price of one ounce of gold.
This results in the home / gold ratio or the cost of the median single-family home in ounces of gold. For example, it currently takes a relatively low 106 ounces of gold to buy the median single-family home. This is dramatically less than the 601 ounces it took back in 2001. When priced in gold, the median single-family home is down over 80% from its 2001 peak (to a level last seen in 1980) and remains well within the confines of a six-year accelerated downtrend and continues to close in on its 1980 trough.
These ratio charts that I put up on the site are just food for thought. No one walks around with Gold bars in their wallets. There are about three hundred economists in the world who are against gold, and they think that gold is a barbarous relic – and they might be right. Unfortunately there are three billion inhabitants of the world who believe in gold (from Janos Fekete)