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Schiller's 'history Of Home Values' Chart...

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From 'Irrational Exuberance' Robert J Schiller, 2006.

"Two gains in recent decades were followed by a return to levels consistent since the late 1950s."

Somebody remind me why this won't happen again? And indeed why an 83% increase in prices over 10 years is sustainable?

TD

Edited by The Dragon

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"Two gains in recent decades were followed by a return to levels consistent since the late 1950s."

Somebody remind me why this won't happen again? And indeed why an 83% increase in prices over 10 years is sustainable?

TD

Why should it? He's basing his predication on n = 2. Not the most robust data set. And why is the late 1950s price point the appropriate level for consistency?

Edited to remove image.

Edited by aussieboy

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Why should it? He's basing his predication on n = 2. Not the most robust data set. And why is the late 1950s price point the appropriate level for consistency?

Edited to remove image.

For UK it's closer to 300, and the return will be to something like 60, that's what I think.

So anyone with cash worried that there will not be a crash, I am sure it will be beyond your imagination, and when you have seen the crash, you will buy cheap, but not be so sure about the world you live in, and want to have the boom times back. The world as we now it for the last 20 years

will change. I think there will be a return of very hard economic conditions not seen since before WW2.

Edited by carseller

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You know how I feel about chartism, DrB.

I do not believe in chartism but I do believe in inflation-adjusted mean reversion. The only thing is, inflation indices are a little unreliable. Still, it will go down a lot.

Edited by Goldfinger

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I do not believe in chartism but I do believe in inflation-adjusted mean reversion. The only thing is, inflation indices are a little unreliable. Still, it will go down a lot.

Reversion to the mean's a funny thing and I'm never sure when it's appropriate to pull out the central limit theorem. However, I do know that that time is not when you have two self-selected data points.

For the record, I also think that when there is such a large aberration from a long term average, something has either changed fundamentally for good or something has to give. Given that perhaps free money is not longer as free as it was, perhaps something has to give.

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Even a reversion halfway back to the mean will lead to a lot of pain.

For some, undoubtedly.

But for others - those who have been priced out for years, those who have had to choose between having a house and having a family, those who had to choose to work rather than raise children, those who had to do massive commutes to work because they couldn't afford to live within a 50 mile radius of their job, and those who have been deprived of the basic dignity of being able to secure a home of their own - it may become 'their turn'.

Perhaps it has been kept below the media parapet, but there has already been a lot of pain for a great many; some would argue a redressing of the balance is just.

TD

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Whats wrong with statistics and analysis.

Whats the alternative, listening to kirstie Allsop?

Chartism has nothing to do with statistics and analysis, its a qualitative interpretation of data.

It seems to work largely because enough people in the markets believe it does as a self-fulfilling prophesy.

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From 'Irrational Exuberance' Robert J Schiller, 2006.

"Two gains in recent decades were followed by a return to levels consistent since the late 1950s."

Somebody remind me why this won't happen again? And indeed why an 83% increase in prices over 10 years is sustainable?

TD

Doesn't the recent boom happen to follow the new laws preventing suburban sprawl, i.e. since the supply suddenly became pretty limited. The game has changed.

Mind you, it's changed a bit too far, it needs to come down a way.

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