I ran across this very interesting analysis of the California real estate market by Goldman Sachs this weekend (PDF alert!). It is the author’s contention that in the past, changes real estate prices could be explained by two factors: disposable income and interest rates. They then go on to demonstrate, as shown below – how…
Tag: income
Spot the Fundamentals, Addendum
Fact: As of 2005, Seattle area per capita income is the 15th highest in the nation (source). Fantasy: “That pretty much says it all.” i.e. – Incomes in the Seattle area are so high, that it doesn’t matter how slowly they are growing. High incomes alone will keep home prices from falling. Reality: Of the…
Spot the Fundamentals
Let’s play a game. It’s called “Spot the Fundamentals,” and the way we play it is by looking at some of the “fundamentals” to figure out which ones are responsible for our area’s high home prices. The frequent condescending argument of the cadre of Seattle area housing bulls (real estate agents, “analysts,” the press, and…
Pop Quiz Time: Fundamentals or Speculation?
Here’s a pop quiz for you. Take a look at the following two tables and try to determine which one more closely resembles a market based on fundamentals, and which one represents a market based on speculation. Median Household Income vs. Average Rent: 2000-2005 Year Med. Income % Chg Avg. Rent % Chg 2000 $53,200…
Correction: Income Decline Map
I’d like to make a correction to an earlier post. It was pointed out to me by the ever-vigilant Richard that the income map I posted earlier this week used data sets from two different sources for the two years they compared. The discrepancy was discovered by a pair of reporters at The Examiner. More…