Commenter MIDan pointed out a downright funny article over at Forbes.com in which they publish graphs predicting the next ten years of real estate prices in 15 metro areas around the country, including Seattle. Here’s their graph for Seattle:
You just know it has to be correct, because I mean listen to this terribly convincing gobbledygook that explains their secret formula:
The company bases its forecasts on an econometric model that looks at the relationship between prices and various factors that have historically driven supply and demand in these markets. The intricate formula was proved to work when compared with actual house-price performance through the early 1990s, a period when home prices rose and then fell sharply.
Ooooo, their “intricate formula was proved to work.” I guess we should all just take it at face value then. And why wouldn’t we want to? Seattle comes out far better than pretty much every other metro area they applied their secret sauce to. Here are the full results, sorted by highest forecasted appreciation first (click a column to re-sort):
|Metro Area||2006||2016 Frcst||Total %||% / Yr.|
|San Diego, CA||$624,987||$856,067||36.97%||3.20%|
|St. Louis, MO||$147,359||$195,607||32.74%||2.87%|
|Los Angeles, CA||$538,477||$667,048||23.88%||2.16%|
|Minn.-St. Paul, MN||$244,186||$286,397||17.29%||1.61%|
|New York, NY||$558,853||$611,045||9.34%||0.90%|
Woo! Go Seattle, right? An average 4.76% per year appreciation for the next ten years! Sanity check: According to Moody’s Economy.com, in the next ten years, home prices in Seattle will overtake Miami, Boston, Washington, and New York?!? Okay I don’t care how intricate your formula is, if you think home prices in Seattle will be higher than in New York City, I think you’ve intricate-ed yourself right off your rocker.
But that’s just my ignorant, non-economist opinion. I don’t have any intricate formulas to back it up. This concludes your excessively sarcastic post for today.
(Lacey Rose, Forbes.com, 09.08.2006)