How Much will Your House Loos in Value!
Some gurus have looked at a value of a 50% fall in valuations.
I will say that number struck me as really high but then I thought that I would re-examine this view in light of recent developments, and the afforability index.
Here is some data a dug up. If the ratio of homes to wages were to revert to it historical average the U.S. domestic real-estate market would lose $6.6 trillion paper value roughly 50% of most real estate valuations.
Here are the graphs that I found to suppor this idea. The Green line is the average ratio. Now many people will argue that homes are different etc. 2 people incomes etc. I would counter the size of the average household has fallen dramatically.
Seems the housing market may have a ways to go in terms of dropping price value due to declining affordability by homeowners.
Take care,
Ankit Duggal
References:
“Will America Loose $6.6 trillion in paper value?” http://nickgogerty.typepad.com/designing_better_futures/2007/08/will-america-lo.html
