home prices AND stock prices (expressed in consumer purchasing power)
have been contemporaneously far above extrapolated history (more ...).
(Both separately shown here; and see below "NOTE:".)
The last Real Homes price would have to be 20% lower to equal extrapolated history (ca. 54).
The last Real Dow price would have to be 53% lower to equal extrapolated history (50).
Chart y-axis is 0-100 for both Real Dow and Real Homes;
for each, a then all-time high is made equal to 100.
The Real Dow and the 1.64 %/yr curve (here extrapolated) are from
"the compelling Real DJIA, 1924-now" at
The Real Homes data are from a Robert J. Shiller website ("This site
offers updated information relating to the book Irrational Exuberance
by Robert J. Shiller.", 2nd ed., April 2005):
Real Home Price Index data
in Excel file
on Feb. 22, 2011 (2010 Q4 and later data release updates by me). The
latest annual datum is for 2006.
The 1890-2006 dates (column A) are just the four digits.
The 1913-2006 Consumer Price Index data (column O, BLS CPI-U)
are for the month of January (center is mid-Jan.).
The 1987-2006 Nominal Home Price Index data
(column I, S&P/Case-Shiller U.S. National Home Price Index)
are for the first quarter (center is mid-Feb.).
So, the 1920-2006 Real Home Price Index data (column B, quotient
of I and O) are all dated February 1, the average of the foregoing.
After 2006, Nominal Home Price Index data are quarterly.
The CPI-U data are for the initial month of the quarter.
So, resulting Real Home Price Index data are dated 2/1, 5/1, 8/1 and 11/1.
The Real Homes table includes the plotted data.
(From just before the last chart on this page: [8/27/06
N.Y. Times] "Two gains in recent decades were followed by
returns to levels consistent since the late 1950's.".)
NOTE: as elaborated at
The New York Times published a plot such as Real Homes on 8/27/2006, and
The Wall Street Journal published a plot such as Real Dow on 3/30/1999.
(Also, TheMotleyFool/Housel/Shiller, plot of real Homes on 5/2/2014)
(Also, WSJ, small plot including such as Real Homes on 6/27/2011)
(Also, CNN, plot of real Dow on 3/6/2013)
(Also, WSJ, log plot, Nominal Dow and Real Dow on 12/28/2009)
(And, Durango Herald, plot of Nominal Dow and Real Dow on 5/1/2011)
home prices AND stock prices have been
(1) the downward drift of the personal saving rate for three decades (11%→3%),
and (2) the accompanying doubling, over two decades, of the household debt/income ratio
after 25 years in the narrow range 0.51 - 0.60.
See the first below chart. The two traces of annual data serve to show
progressions to recent levels that are very extreme relative to history
before the mid-1970's/80's. (ALSO: the evident breaks after 2007 of these two
'More Consumption' trends coincide with a huge jump in U.S. governments' debt,
The second below chart is the chart at the top of this page,
repeated here to facilitate comparing.
Federal Reserve Board authors recently published plots such as
those in the second above chart; see Figure 1 herein:
See also http://www.pgpf.org/Chart-Archive/0063_personal-savings
(These three links use Disposable Personal Income.)
For Personal Saving in the second above chart, data sourced 3/4/2014 from
Table 2.1. Personal Income and Its Disposition (A) (Q)
Last Revised 2/28/14
U.S. Department of Commerce
Bureau of Economic Analysis
National Economic Accounts
National Income and Product Accounts Table
Personal Saving as % of Personal Income
(line 35 is different: % of Disposable Personal Income)
line 34, Personal saving
line 1, Personal income
multiplied by 100.
For Ratio of Debt to Income in the second above chart, Income data,
which are calendar year, identical to the above ("line 1, Personal income").
Debt data, which are end-of-year, sourced 3/6/2014 from
Board of Governors of the Federal Reserve System
Financial Accounts of the United States
Release Date: March 6, 2014
z1r-2.pdf Debt growth, borrowing and debt outstanding tables
Table D.3 Debt Outstanding by Sector
Domestic nonfinancial sectors, Households, Total
NOTE: The above sourcing is for debt data 1982 to the present.
Earlier data are from Table L.1 in files
a1975-1984.pdf, a1965-1974.pdf, a1955-1964.pdf, and a1945-1954.pdf,
Ratio of Household Sector Debt to Personal Income
average of the two 12/31 Debt data bracketing the calendar year
Personal Income datum for the calendar year.
"A History of Home Values" (U.S.) chart in the 8/27/06 N.Y. Times, accompanied by
"Two gains in recent decades were followed by returns to levels consistent since the late 1950's."
The other three indices are S&P/Case-Shiller Home Price Indices.
is used to infer the candidate future "WILL return to ca. 54". (This inference matches the
'not-overshooting' one stated by Robert Shiller in May 2009: "That is the issue, whether we'll
overshoot and end up being below, in inflation-adjusted terms, where we were in 1997." Updates)
Then all four indices are well above their inferred "WILL return to" levels (see chart).
For example, the S&P/C-S US (green points) level of 67.6 in mid-February 2014
would have to be 20% lower to equal its inferred "WILL return to" level of ca. 54.
corresponds to a 20% lower US$ home price, at constant CPI-U.
they would have to be to equal their inferred "WILL return to", "where we were in 1997" levels
(see chart): S&P/C-S US (green points), 20%; S&P/C-S 20 (blue points), 29%; S&P/C-S 10
(red points), 36%.
The "IrrExubRJS US" black data are identical to the "Real Homes" data
in the chart at the top of this page (green trace).
The S&P/Case-Shiller Home Price Indices are
the leading measure of U.S. home prices.
From page 8 of NYSEArca-2008-92.pdf, downloaded from
... The Indices measure changes in housing market prices
given a constant level of quality. ...
... The Indices use the "repeat sales method" of index calculation --
an approach that is widely recognized as the premier methodology
for indexing housing prices -- ...
... The Indices are designed to measure, as accurately as possible,
changes in the total value of all existing single-family housing
The "S&P/C-S 10" red points are the S&P/Case-Shiller 10-City Composite
Home Price Index, released monthly, as inflation adjusted by me.
(At this 9/2/07 writing,) the S&P/Case-Shiller 10-City Composite
Home Price Index data are from a S&P website:
monthly Composite CSXR data
in Excel file
CSHomePrice_History_082857.xls (Tue, Aug 28, 2007, 6:25 AM)
downloaded from (URL updated)
Last datum 'for June 2007', actually it's a 3 month moving average,
so it's a April-June average (dated mid-May), so I divided it by
the average CPI-U for April-June; scaled to make all-time high = 100.
Same for "S&P/C-S 20" blue points, except it is S&P/Case-Shiller
20-City Composite Home Price Index, data are Composite-20 SPCS20R.
Same for "S&P/C-S US" green points, except it is S&P/Case-Shiller
U.S. National Home Price Index, released quarterly, from Excel file
csnational_values_082857.xls (Tue, Aug 28, 2007, 6:24 AM)
Bubbles relative to GDP
These differences on the chart correspond to very large sums.
The Jan 2000 peak Real Dow price is indicated excessive by a factor 100/39.
Using this factor for total equities, one calculates excess pricing equal
to 1.1*GDP at that time.
The Feb 2006 peak Real Homes price is indicated excessive by a factor 100/54.
Using this factor for total homes, one calculates excess pricing equal
to 0.8*GDP at that time.
Source. Flow of Funds Accounts of the United States, Board of Governors of
the Federal Reserve System, June 9, 2011 release; 1995-2004: page 105, line 6
and page 4, line 1; 2005-2010: page 95, line 4 and page 4, line 1. Go back
* Robert Shiller -- Too soon to call a bottom in housing,
much less the start of a boom -- in December 2012.
With 2012 Q3 the latest national data released, Shiller is quoted:
We might see home prices go up a little bit, you know, a little bit
above inflation, maybe. Not likely that we'll see a real boom.
* Robert Shiller re. home prices stabilize?, in May 2012.
With 2012 Q1 the latest national data released, Shiller is quoted:
... but there's a good chance we'll continue down for years still.
* Robert Shiller attentive to overshoot in April 2012.
With 2011 Q4 the latest national data released, Shiller is quoted:
the housing market decline hasn't overshot yet, really. It could do that.
* Robert Shiller attentive to overshoot in June 2011.
With 2011 Q1 the latest data released:
He added that a 10 percent to 25 percent [further] slump in real home prices
wouldn't surprise me at all, though he cautioned that was not a forecast. (NOTES: a 10 percent further slump would return IrrExubRJS US (black) real home prices to where we were in 1997 (ca. 54 on my chart); 25 percent would take it down to the level of 45.) * The recent discontinuity in falling prices was attributed to a temporary tax credit -- by David M. Blitzer, Chairman of the Index Committee at S&P Indices, in 5/31/2011 Press Release National Home Prices Hit New Low in 2011 Q1, According to the S&P/Case-Shiller Home Price Indices: The rebound in prices seen in 2009 and 2010 [began 2009 Q2] was largely due to the first-time home buyers tax credit. Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession [12/2007-6/2009]. Go back