Saturday, October 3, 2009

We made it?

For some time I have been predicting that 2000 prices were where home prices would settle. I just ran into this quote:

"In America the Case-Shiller index of national prices is back to where it was in the fourth quarter of 2000. And, despite the falls, the ratio of average prices to average incomes, a measure of the affordability of housing, is still nearly 20% above where it was in 2000, a few years into the house-price boom."
The Economist

I guess I hadn't been paying close enough attention to Case-Shiller index, so I went and downloaded the numbers. The current Case-Shiller numbers there are listed as 144.23. This is what home prices were in 2003, in December 2000 the index was at 111.58, it wasn't until August 2003 the index hit 144. So I feel the economist is a bit confused.

Maybe the Economist is including inflation and Case-Shiller isn't? So far as I can tell that isn't what is happening, but the economist usually doesn't make big mistakes like that.

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