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Additional Doomsayer Conversations

 
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PostPosted: Sat Oct 27, 2007 5:27 pm    Post subject: Additional Doomsayer Conversations Reply with quote

AE: Census data are real data. Obviously, Schiller is wrong. Here are the data:

Adjusted to 2000 dollars

2000 1990 1980 1970 1960 1950 1940

United States $119,600 $101,100 $93,400 $65,300 $58,600 $44,600 $30,600

-----------------------------------------------------

Median Home Values: Unadjusted

2000 1990 1980 1970 1960 1950 1940

United States $119,600 $79,100 $47,200 $17,000 $11,900 $7,354 $2,938

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KT: You present data beginning in 1940 to support a weak case and attempt to disprove Shiller whose peer reviewed academic paper is considered the best analysis of the historic relationship between housing and inflation.

Let see, in 1940 America has just emerged from the Great Depression where house values were destroyed. Try taking your data on prices starting at 1929 and see how that changes your analysis. Are you always this sloppy, or just plain stupid?

That data set starting in 1940 would be equal to a company touting its share price gains between Oct 20, 1987 (after the major correction)and Oct 1988. Accurate numbers, but misleading, out of context, and a sign of desperation.

AE: I'd like to see that paper. Why don't you present it? So, you're saying when people bought houses in 1929, their houses depreciated? However, when people bought houses in 1940, those houses quadrupled in value after inflation? I didn't know the Great Depression actually destroyed houses (maybe they needed firewood). Normally, economic expansions are measured when they start and when they end. Similarly, contractions are measured when they start and end. Are you saying that's misleading?

KT: Don't take it from me. Go to the a Federal Reserve Bank website and use its Consumer Price Index Calculator:

http://www.minneapolisfed.org/research/data/us/calc/

If you had goods worth $30,600 in 1940, you would need $450,912 to make that same purchase today. If you bought goods worth $30,600 in 1929, those goods could have been purchased for $24,873 in 1940. Housing did not match CPI in that period.

As for Robert Shiller's work on house prices, why don't you buy his book "Irrational Exuberance" edition of 2005 and have someone read it to you. Surely as an economist you would have heard of him and the book. If you go so Shiller's website for the book you can download the data set for yourself.

Oh, never mind. As with economics, you have no clue about statistics either

AE: You didn't provide his paper. Also, you used median U.S. housing prices already adjusted for inflation in your inflation calculation. In 1940, the median U.S. home price was $2,938, not $30,600 (which you used). Using your inflation calculator, the median price would be worth $36,137 in 2000 due to inflation. However, the median price in 2000 was $119,600. So, the real appreciation was substantial. Also, I may add, the increases in income were much more than the rises in inflation. So, a much smaller proportion of income was spent on houses in 2000 than in 1940. Moreover, quality improvements aren't taken into account. The median U.S. house in 2000 was newer, bigger, and better than the median U.S. house in 1940. Schiller is way off. So, why should I buy his book (his title is not even original, it's a quote by Greenspan)?
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