Comments on: Divining housing prices: which crystal ball to use? http://firsttuesdayjournal.com/divining-housing-prices-which-crystal-ball-to-use/ Wed, 08 Feb 2012 04:44:54 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Alan http://firsttuesdayjournal.com/divining-housing-prices-which-crystal-ball-to-use/comment-page-1/#comment-51259 Alan Mon, 07 Dec 2009 20:12:32 +0000 http://blog.firsttuesdayjournal.com/?p=2083#comment-51259 Hi Nick: Could you elaborate on calculation your paragraph pasted below please. "One of the strongest predictors of future housing prices is a ratio calculated by comparing the price of a house and the value of future ownership (as rental income or as money saved by the homeowner not paying rent, called implicit rent). The national ratio stayed somewhere between 5% and 5.5% from 1960 to 1995, when it then plummeted to 3.5% at the height of the boom in 2006. Prices need to fall by another 10-15% between now and mid 2011 in order to return to the historic ratio, suggesting the housing bust is only halfway through". Hi Nick:

Could you elaborate on calculation your paragraph pasted below please.

“One of the strongest predictors of future housing prices is a ratio calculated by comparing the price of a house and the value of future ownership (as rental income or as money saved by the homeowner not paying rent, called implicit rent). The national ratio stayed somewhere between 5% and 5.5% from 1960 to 1995, when it then plummeted to 3.5% at the height of the boom in 2006. Prices need to fall by another 10-15% between now and mid 2011 in order to return to the historic ratio, suggesting the housing bust is only halfway through”.

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