Secret #57 – With the Exact Same Monthly Principal and Interest Mortgage Payment – In December 2020 You Could Borrow 31% More Money to Buy a House than You Could in November 2018
Secret #57 – With the Exact Same Monthly Principal and Interest Mortgage Payment – In December 2020 You Could Borrow 31% More Money to Buy a House than You Could in November 2018
House buyers – both investors and live-in buyers – could borrow a lot more money with the same payment in 2020 and 2021, so naturally, over time, they bid up house prices.
If you looked at the Case Shiller Index for Phoenix, from 1992 (after the S&L Crises, when the CSI was around 66) and through 2004 (before the 2006 through 2012 housing crisis) and draw a straight trend line (removing the 2006-2012 housing crisis, you would arrive at an index number of 250+/-. If you deduct the 250 (which is where we should be based upon a steady trend point (factoring out record low interest rates, the housing crisis, etc.) from the current Case Shiller Index of 324 for Phoenix in March, the difference is 74. Divide the 74 by the 250, and you arrive at 30%, which is how far we are out of whack by many opinions (and your post). Not very scientific, and it will vary from market to market, but projecting historical trends from times when the market was more in balance through today will often present some idea of just how far astray, we wander.
If you looked at the Case Shiller Index for Phoenix, from 1992 (after the S&L Crises, when the CSI was around 66) and through 2004 (before the 2006 through 2012 housing crisis) and draw a straight trend line (removing the 2006-2012 housing crisis, you would arrive at an index number of 250+/-. If you deduct the 250 (which is where we should be based upon a steady trend point (factoring out record low interest rates, the housing crisis, etc.) from the current Case Shiller Index of 324 for Phoenix in March, the difference is 74. Divide the 74 by the 250, and you arrive at 30%, which is how far we are out of whack by many opinions (and your post). Not very scientific, and it will vary from market to market, but projecting historical trends from times when the market was more in balance through today will often present some idea of just how far astray, we wander.
https://public.tableau.com/views/Case-ShillerCustom_2/1990Baseline-Real-Case-ShillerHPILessShelter?:language=en&:embed=y&:sid=&:redirect=auth&:embed_code_version=3&:loadOrderID=11&:display_count=y&:origin=viz_share_link