Look: I am eager to learn stuff I don't know--which requires actively courting and posting smart disagreement.

But as you will understand, I don't like to post things that mischaracterize and are aimed to mislead.

-- Brad Delong

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Sunday, May 29, 2011

House and Home

Here is a look at housing over the last 50 years, or so.

Single family dwelling construction, nationwide, by year.

The average over the data set is 1.068 million.  There's a lot of what looks like boom and bust here, but the years centering on 2005 are most especially bubblicious.  Oh - and what a crash!

Here is a look at pricing, on a log scale .

That is certainly not a straight line.  But pricing is subject to a lot of inputs.  Material cost, inflation, inventory and demand levels spring readily to mind.  Also note the bubble can be seen here as well - though it tops out in 2007 instead of 2005.

To get a handle on how all these home purchases have contributed to debt overhang, here is a graph of single unit construction per year, multiplied by the median price.  (1959 - 62 price data extrapolated from the '62 - 68 trend.)

The whole point of this exercise is to see how closely this graph represents the one linked here that Art acquired from Krugman.

Interesting differences and similarities.  But I am willing to posit that a great deal of the debt overhand is specifically housing related.  And until that situation is corrected, the housing market and general U.S. economy are going to be in a sad, sad state.   Good bye, American Dream.

Data from the Census Bureau:


The Arthurian said...

Interesting, the way exponential trends keep showing up in so many graphs, like your 3rd graph here, only to be interrupted by sudden decline. I know... growth is exponential. Still, the graphs show that we did not even try to slow the growth of debt. We just let nature take its course.

If you and I keep antagonizing each other into doing more graphs and more posts, that's gotta be a good thing.

Jazzbumpa said...

Yes - growth is exponential. Except when it isn't. And exponential growth can't go on forever.

I don't consider hist to be antagonizing. We're pretty much on the same wavelength, but differ enough to keep the conversations interesting.

I encourage disagreement - it makes me think. You, too, I gather.


Stagflationary Mark said...

"The average over the data set is 1.068 million."

It is interesting that an average looks to work here in an exponential growth world (or lack thereof).

That alone should be a reason for concern perhaps and fits nicely with the post I did (that you just commented on) showing the problem with housing starts per capita driving our economy.