IMF Report: Housing still way overpriced

Monday, July 28, 2008 | 06:30 AM

Fascinating analysis from Vladimir Klyuev analysts at the IMF, titled What Goes Up Must Come Down? House Price Dynamics in the United States

I found the charts at the end of the report particularly compelling -- they utterly demolish the calls for a real estate turnaround we heard last week from people who should know better.

Even if you do not want to accept the premise of the 4th chart's -- a mean reversion and overshoot -- the first three charts make it hard to argue that we are any where near a bottom.

>

Price Index, Single Family Existing Homes

Price_index_single_family_homes

>

Real Home Prices and Rents
Real_home_prices_vs_rents

>

OFHEO Purchase Only Price Forecasts
Ofheo_purchaseonly_price

>

Home Price Simulations
Home_price_simulations

 

 



Source:
What Goes Up Must Come Down? House Price Dynamics in the United States
Vladimir Klyuev
IMF, July 1, 2008
http://www.imf.org/external/pubs/cat/longres.cfm?sk=22179.0

IMF PDF
http://www.imf.org/external/pubs/ft/wp/2008/wp08187.pdf

What went up continues to go down
The Economist, July 26, 2008
http://www.economist.com/blogs/freeexchange/2008/07/what_went_up_continues_to_go_d.cfm

Monday, July 28, 2008 | 06:30 AM | Permalink | Comments (31) | TrackBack (0)
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Comments

That these graphs are not on a logarithmic scale makes me suspicious. The first one in particular sure looks like a plain old exponential growth which is exactly what we should expect to see.

It's an old trick to graph normal exponential growth on a linear scale and point to the recent history and say it's out of whack with the long tail.

~~~
BR: Out of whack with the long tail? WTF? Do you have any idea what the Long Tail is?

Posted by: Gerg | Jul 28, 2008 7:19:15 AM

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