Friday, January 16, 2009
Let's have a look at price in relation to sales since 1966. We can see the extreme spike during the previous real estate crash (around 1989) - it was not until 1996 that the ratio got back down to a reasonable range (near the trendline). In 2008, the ratio ticked up again. It will be interesting to see what happens in 2009. If the sales and price trends continue the way they behaved the past three months or so (let's say sales down 40% and price down 8%), the projected ratio would shoot up as shown. If this does happen, it would resemble the 1989 portion of the chart again.
Posted by JET at 11:09 PM