These Charts Deserve More Attention

It was no more than 5 months ago that people who had skin in the game would brush me aside as if I was some dumb young kid who knew nothing of the housing market, knew nothing of economics and was a fool for proclaiming from the mountain tops that there was housing crash and it was on its way.

5 short months later and with enough negative news hitting the market, now I am no longer brushed aside, but rather sought after for one question and one question only;

"Are we at the bottom yet?"

To which I answer, "heck no, we're not at the bottom, this is just the beginning!" with a smile on my face for even though I own a house I enjoy being right more especially when these were the same people ignored me and laughed at my outlandish theories about a housing bubble. And the data would support me on this. This spiffy charts provided by the Minneapolis Area Association of Realtors suggest that the correction has JUST BEGUN! Very similar to the Shiller Roller Coaster chart.

The second question I'm asked is "when will it bottom out?" requesting I give an estimate. So now that it seems I might have people's attention I'm going to bring back two charts that I think you'll pay a little more attention to this time around;

1. National House Price to Rents. This shows you that house prices have increased faster than the cash flows that should afford them; rents. And if housing prices were to get back into historical line, they would have to drop by about 40%.

2. National House Price to Income. This compares the median house price to the median income. This implies that housing would have to drop by 20% to get back into line.

So I don't know, 6 months to a year? Depends on if developers cut back on flooding us with a glut of cookie cutter townhomes and condos. Regardless, it's going to be a while and America is going to get a LONG OVER DUE lesson in them merits of fiscal austerity.

Additionally, I also suggest you read this little ditty because I speculate on the effects on the overall economy and it's just plain freaking funny. This too should have gotten more play than it did.

Alas, I don't play the tune people want to hear, just the tune they needed to hear 6 months ago.