Seattle Bubble Forum Archive

I'd love to see housing prices in *gold* for the last decade. Case Shiller, calculated based on home price in ounces of gold instead of dollars. Anyone seen something like that?

I've wondered how much of the bubble is actually just devaluation of the dollar.

I went from Jan 2000 to July 08 (C-S data) and used the monthly gold average, and the correlation isn't very strong, at least not for the national composite. It starts at about 0.35 housing units / $ of gold, peaks at 0.5 units/$, and falls to below 0.2 units/$.

Seattle is steadier, starting at 0.35 and more gradually sliding to 0.28 before plummeting in the last ~10 months (also bottoming out below 0.2 units/$).

Both curves are fairly volatile, because gold is fairly volatile.

I'll add some more data later and see what the longer term conditions look like.

It seems to me that housing in America has more or less followed the value of the dollar adjusted for inflation for the last 150 years. If it more closely correlates to gold in the last 7 years...that would make this an interesting thesis, but I don't see it bearing out very much.

I would like to add, that Warren Buffett probably has a similar position on gold (as opposed to gold mining companies) as he does on housing itself: It doesn't produce anything, so it's not an investment.

I went back to 1990.

Using the same axis, the data is fairly steady from mid 1990 until 1997, hovering around 0.2. There's a pretty steady climb from 1997 until 2001 (housing prices increased, gold stayed flat), at which point Seattle diverges from the composite, as well as gold catching up in relative price. Both have returned to their 1990-1997 affordability in terms of gold.

I don't think this metric has much value.