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Yamada-"set a target for gold of $5,200"; Housing - "price compression from rising mortgage rates"



May 20, 2011 – Comments (1)

CSH has another great post -

Priced in Gold, Is Housing a Buy?

What is the relative value of housing if we price it in ounces of gold?


My basic point of view is that nominal prices and broad terms such as deflation, inflation and growth should be viewed with extreme skepticism. The more useful approach is to examine the purchasing power of various assets and the the purchasing power of the income streams generated by those assets.

Put another way: to value housing, let's compare the price of a house priced in loaves of bread, or ounces of gold, or barrels of oil to historical norms. Secondly, let's look at the income stream generated by the median-priced home (that is, the median rent and net income after all expenses of maintaining and paying for the rental home are deducted) and ask how many loaves of bread, ounces of gold and barrels of oil that net income can buy.

Corrospondent Bart D. has charted some relative values for essentials in Australia, and I will share his fascinating charts next week. Inspired by his work, I have done some calculations on U.S. prices of bread, housing, oil, etc. as well.

Today let's look at a chart of the Case-Shiller Housing Index priced in gold, courtesy of longtime correspondent Harun I."

The rest is here:


1 Comments – Post Your Own

#1) On May 21, 2011 at 1:04 PM, FleaBagger (27.35) wrote:

I don't think you can make more than 1% of your down payment in housing. It's actually more likely to lose you money until your mortgage is paid off.

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