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BecksMyCat

Are House Prices A Lagging Indicator?

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Just a quick question, I googled this unsucessfully. Do house prices lag behind the business cycle?

I would guess they lag behind the business cycle, as they must be effected by unemployment which lags the cycle.

I am asking this as I remember reading (in 2007) that they can be a leading indicator. I am wondering if they are both?

Do they start to drop at the first sign of trouble and then only recover when unemployment recovers?

Thanks

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Just a quick question, I googled this unsucessfully. Do house prices lag behind the business cycle?

I would guess they lag behind the business cycle, as they must be effected by unemployment which lags the cycle.

I am asking this as I remember reading (in 2007) that they can be a leading indicator. I am wondering if they are both?

Do they start to drop at the first sign of trouble and then only recover when unemployment recovers?

Thanks

Do you really need fiddled statistics to know that the economy is nosediving?

A wholly consumption based economy based upon the fractional reserve banking system is simply not sustainable, no matter what people will tell you. One cannot deny the power of an exponential growth curve.

Business in Britain in recent times has been the housing market, so does the tail wag the dog or vice versa?

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. This issuing power should be taken from the banks and restored to the people to whom it properly belongs. If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. I hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country" Thomas Jefferson, 1791

Edited by cashinmattress

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Thanks, although I don't feel that fully answered the question.

In previous cycles have they lagged the business cycle when the economy recovered. I believe they did in the 90s.

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Just a quick question, I googled this unsucessfully. Do house prices lag behind the business cycle?

I would guess they lag behind the business cycle, as they must be effected by unemployment which lags the cycle.

I am asking this as I remember reading (in 2007) that they can be a leading indicator. I am wondering if they are both?

Do they start to drop at the first sign of trouble and then only recover when unemployment recovers?

Thanks

Rheinhart and Rogoff, in their study earlier this year of past financial crises throughout the world, give the following average periods for top to bottom:-

GDP - 1.8 years

Stock market 3.5 years

Unemployment 5 years

Housing 6 years

If, as people are saying, GDP has now bottomed out 2 years from the top of the bubble, we may have another 4 years before housing does, although we do not know if quantitative easing on the scale we are seeing will shorten this cycle.

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