Comments on News N Economics: Housing bubbles around the world: looks pretty bad...

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2010-10-16T16:34:06.000-04:00

hnbvvfffccf :-$ :-$ :-$ :-$ :-$ :-$ :-$ :-$ :-$ :-$ :-$ :-$ i :-$ :-$ :-$ :* :* :* :* :* :* :* :* yhhmhmhn ¿En qué estás pensando...?

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2010-10-16T16:33:21.000-04:00

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¿En qué estás pensando...?

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2010-09-15T18:55:20.000-04:00

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2010-09-15T18:54:57.000-04:00

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I think listing the ratios relative to 1997 isn...

2009-09-09T14:48:39.472-04:00

I think listing the ratios relative to 1997 isn't the best way to show the data. It's good for comparing several countries to one another, but the absolute values (vs. relative values) would be more useful. I want to know if the price-to-rent ratio in my area is 12 or 18 or 23, not what it is compared to 1997.

Even if the relative price-to-rent vs 1997 is 0.9 (which means it's 10% lower than it was in 1997), maybe in 1997 the ratio was 22. Then that means it's 19.8 now, which means it's not economically feasible to buy a house.

Renting will always be cheaper than owning until price-to-rent ratios fall back to 10 or 12.

Hi Anonymous, You say: Nice graph, but how was it...

2009-05-27T07:10:08.218-04:00

Hi Anonymous,

You say: Nice graph, but how was it calculated?

In the graph, the pice to rent ratio = price house / owner-equivalent rent (usually an index of the CPI), and then indexed to 1997.

So the 2.8 represents the growth in the price to rent ratio above its normalized level in 1997 (the ratio is indexed to 1997), rather than the actual price to rent in that year.

Rebecca

Nice graph, but how was it calculated? According...

2009-05-26T16:42:44.924-04:00

Nice graph, but how was it calculated?

According to wikipedia, the p/r ratio is calculated by dividing the value of the house by the annual rent. If that reached a high of 2.8, then if the average house was 280,000 then the average rent was 100,000 a year!

I assume I've gotten the calculations wrong....

What explains the "bounce" in the Irish ratio in Q...

2009-05-23T07:29:20.346-04:00

What explains the "bounce" in the Irish ratio in Q1 of 2009 (I understood prices were still falling ... or are rents falling faster?)

Would be interested in seeing Canada laid on the g...

2009-05-19T13:45:00.000-04:00

Would be interested in seeing Canada laid on the graph as well. It seems that Canada is a couple years behind the US in terms of housing.

HiRichard, "is there a reason you chose not to in...

2009-05-18T17:02:00.000-04:00

HiRichard,

"is there a reason you chose not to include French, Belgian and Dutch home prices in your charts?"

Perhaps I will amend the chart when I have a little time. It would be interesting to do a more thorough analysis of bubbles. Thanks for the thought.

Rebecca

Rebecca - is there a reason you chose not to inclu...

2009-05-18T10:07:00.000-04:00

Rebecca - is there a reason you chose not to include French, Belgian and Dutch home prices in your charts?

I understand that little is written about them, but according to the ECBs latest housing report they appear to have witnessed close to 10% CAGR growth from 1999 to 2008... which surely puts them in a vulnerable position.

I note Irish data starts in 1997, hence the numera...

2009-05-18T09:48:00.000-04:00

I note Irish data starts in 1997, hence the numeraire.

But U wibder how pre-1997 data might add further information. Would Ireland look even more like an outlier (i.e. would that green line move of in a negative direction pre-1997?). I reckon it might just.

Impressive differences in magnitude and timing! I ...

2009-05-18T07:19:00.000-04:00

Impressive differences in magnitude and timing!
I would suggest another graph plotting the impact between countries. More precisely, Germans and, to a lesser extend, Britons fuelled the housing boom in Spain. Roughly half the new builds on record years (a total 800.000 new houses per year 2006-2008) were built for them. The price of half the market was then growing at two speeds: the ratio for foreign retirees decoupled from the local market.

Hi Charles, The term “rent” is slightly misleadin...

2009-05-16T18:14:00.000-04:00

Hi Charles,

The term “rent” is slightly misleading – it is actually the “rental equivalent” cost of home ownership, but as you suggest, each country uses varying measures of home ownsership costs…like mortgage interest payments (UK), owner-occupied rents (US), or I believe foregone income in your neck of the woods (Canada). In all cases, the “rent” is measured as part of the CPI.

Have a nice day! And thanks for the comment, Rebecca

Well done! A useful comparison for real world ana...

2009-05-16T13:52:00.000-04:00

Well done! A useful comparison for real world analysis of rental costs vs housing prices. Probably tricky to confirm rental costs across the range of accommodations, from slum to high end, but such comparison is revealing of changing social issues.
Consider squatters in new homes in California.
see: http://www.youtube.com/watch?v=mWLyd9Jaxtg

Comments on News N Economics: Housing bubbles around the world: looks pretty bad...

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<span>g</span> :* v :* :* hhjmh ...

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rfghfhg

I think listing the ratios relative to 1997 isn...

Hi Anonymous, You say: Nice graph, but how was it...

Nice graph, but how was it calculated? According...

What explains the "bounce" in the Irish ratio in Q...

Would be interested in seeing Canada laid on the g...

HiRichard, "is there a reason you chose not to in...

Rebecca - is there a reason you chose not to inclu...

I note Irish data starts in 1997, hence the numera...

Impressive differences in magnitude and timing! I ...

Hi Charles, The term “rent” is slightly misleadin...

Well done! A useful comparison for real world ana...