Housing As A Store Of Value

Chart of the Day

Declining real estate prices continue to be a concern for investors.
For some perspective on the magnitude of the decline in home prices, today's chart presents the median single-family home price divided by the price of one ounce of gold.
This results in the home / gold ratio or the cost of the median single-family home in ounces of gold. For example, it currently takes a relatively low 106 ounces of gold to buy the median single-family home. This is dramatically less than the 601 ounces it took back in 2001.
When priced in gold, the median single-family home is down over 80% from its 2001 peak (to a level last seen in 1980) and remains well within the confines of a six-year accelerated downtrend and continues to close in on its 1980 trough.


As we have observed in the past, the view that a house is an "investment" or "store of value" is quite mistaken.

There are regions globally that have not yet experienced a serious housing price correction, but it is coming. Canadians, Australians and Finns beware.