Monday, May 4, 2009

Historical Real Estate Value for Newbies

This graph by Robert Schiller displays real (i.e. inflation adjusted) value of composite real estate in the US since 1890, to hopefully offer you guys a glimpse of truth. For decades, an illusion via inflation has convinced many that property value "always go up", not so. We can see this bubble has yet to fully burst and drip down to 100!

It concurrs with my notion that the fixed intrinsic value could make real estate betting undesirable. If we consider property taxes (AKA rates in NZ), structural depreciation, insurance costs, contingent liabilities, it is obvious that an upside bet on real estate requires VERY meticulous planning to end profitably.

Glenn Beck attempts to explore the political moves within the housing price chart. He gets pretty worked up, haha.

0 Reflections: