Nick Gogerty has put together a video using Shiller data showing median incomes relative to house values for selected cities in the US.
The equity build-up and subsequent value loss is sobering. A lot of people have mused retrospectively that if only they had geared themselves to the hilt in '98 and started buying up streets in London, captured all that levered yield shift, and got out in early '07, they'd be zillionaires now. If only. . .
Some missed this boat, knew it and thought they'd jump on the momentum of the convergence play and get involved in some juicy CEE buy-off-plan/ buy-to-let action. Well we know how that ended. And it wasn't such a bad idea. Timing just ended up being everything.
Negative convexity is such a great thing. Except when yields move out.
I wonder how this data would play out for London? What if you bought your London house back in say '02 or even '04? Would you now be back to Y2k levels? Maybe you don't want to know. Ouch.
Nick offers a few more comments in his post over at Designing Better Futures.
UPDATE: Check out this excellent post over at Not PC on house prices. Very good. Hat tip to Batesy.
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