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Chart one and two: recession and recovery time span
The first chart below charts changes in dollar values, according to the Case-Shiller Index method (January 2000 = a home value of 100). The second chart graphs ups and downs by percentage changes at each turning point.
How I read (guess) chart 1&2:
- Peak most likely will take place at 2017 or 2018.
- At the worst it does down -27% (2008-2011), probably 2014 or 2015 level.
- With 1 and 2, you may “lose money” if you buy at median price in 2016.
Chart three: rebound in recovery
The light blue columns in the above chart graph the home-value appreciation that occurred in the first three years of each recovery.
How I read (guess) chart 3:
Peak of this recovery/bubble will go over 100%.
Chart four five six: decline magnitude
Chart 4 below tracking the S&P Case-Shiller Home Price Index for the 5-County San Francisco Metro Area, the data points refer to home values as a percentage of those in January 2000. January 2000 equals 100 on the trend line: 66 means prices were 66% of those in January 2000; 175 signifies prices 75% higher.
5. 1996 to Present
(After Recession) Boom, Bubble, Crash, Doldrums, Recovery
Across the country, home values fell 15% to 60%, peak to bottom, depending on the area and how badly it was affected by foreclosures — most of San Francisco got off comparatively lightly with declines in the 15% to 25% range.
6. The Recovery since 2012 (Case-Shiller)
Chart 6 above looks specifically at home price appreciation since 2012 when the current market recovery began. Generally speaking, the spring selling seasons have seen the most dramatic surges in appreciation.
Chart seven: buying a house? Don’t wait to the next year.
Chart eight: house vs condo
Chart nine: this recovery appreciates much faster
Chart ten: San Francisco very expensive comparing to CA and US median
Comparing San Francisco, California & National
Median Price Appreciation
Chart eleven: rent is appreciating faster than price
San Francisco Rents
Besides, home prices, home rental rates are major indicators of what is occurring with housing costs and the local economy. If anything, rents have appreciated even more extremely than home prices in San Francisco (and other areas of the Bay Area) – and, of course, renters get no advantages from low interest rates, multiple tax deductions and advantages, or home-price appreciation over time. One classic indicator of an overpriced home market is when prices outpace rents. So far, this has not happened in San Francisco: Both types of housing costs have soared in recent years.
Chart twelve, thirteen: interest rate
Mortgage Interest Rates since 1981
Interest Rates: 1993 – 2015
Chart fourteen: still affordable?
Housing Affordability Index (HAI) Cycles, 1991 – Present
Chart fifteen: real money, inflation and interest rate adjusted
Chart sixteen to nineteen: most likely to pickup low/mid priced house cheap at a crash
Different Bay Area Market Segments:
Different Bubbles, Crashes & Recoveries
2000 to 2014
Mid-Price Tier Homes: $587,00 to $950,000 as of 9/15
High-Price Tier Homes: Over $950,000 as of 9/15
- Price appreciation will slow down in 2016, but no crash.
- Look for signs like lower tier houses prices surpassing 06/07 high, or rents going up but house price lagging.
- When recession comes, there’re 2 to 4 years to pick up good deals. Single family houses in higher tier will withhold value much better than lower tiers.
- If you are investing for cashflow in 2016, almost anywhere in US is better than bay area. I.e., invest in out-of-state rental.