Saturday, 3 January 2009
U.S. Housing Market : 1890-2006 vs Finnish Housing Market
This chart show the price evolution in the US from 1890. If one lesson should be taken from this chart, is that the price, overtime, is stable adjusted to inflation.
Although it is clear that we have episode of boom and bust, which always bring the value back to the average level (100-120 in this index).
The only period where house price were relatively cheap was between first and second world war. Even during the depression, house were rising, albeit at an historical low.
-Price stability is of the essence for housing. It's is a target for speculation during only short time (10 years) then goes back to average. This has a very similar pattern with the Finnish housing market.
-It's quite impressing to see that we have not yet seen the bottom in the U.S. Housing Market since its peak of 2006. Most probably a "bottom" will happen, maybe in 2010-2011, so 4-5 years at best.
Translating that to the Finnish market, we will probably see a bottom in 2008+(3-4 years) = [2011-2012] which is the period I would recommend people to purchase a house (according to today analysis, which might still change (due to political intervention-non-sense law, self interest, greed, corruption or sharper than expected correction in 2009-2010 )