Wednesday, June 25, 2008

Home Prices vs. Rents

Here's the graph of the day, courtesy of Paul Krugman. It shows the change in real home prices vs. the change in real owner-equivalent rents since January 2000.


  1. Very interesting graph. Do you think these to lines will intersect at some point?

  2. Houston, we have a problem...

    Although 2000 is an arbitrary start point. It was torwards the end of a fairly spectacular economic growth period. Remember, we were risking recession before 9/11.

    May I recommend a note in the launch article on what Paul Krugman plotted for price and rental. e.g., that this is a national graph.

    Got Popcorn?

  3. I think the blue line will come down to reach the red line. In fact, January 2000 is just an arbitrary start date for the graph. Real home prices started rising in about 1998, so it's possible that the blue line will actually go below the red line.

    Please don't ask me to speculate on when these lines will intersect, though. Based on history, I think the speed of the blue line's decline will slow down as it gets closer to the red line.

  4. Very scientific.