By Mike Shedlock | The Street
Stocks may be expensive based on historical measures, but it’s nothing compared to skyrocketing home values says Robert Shiller.
Consider that the Case-Shiller National Home Price index has gained in excess of 6% per year on average since January 2012, while net rental income has barely kept up with inflation, increasing just less than 2% per year. The result is that home prices seem as overvalued as they were in the spring of 2005, nine months before the peak.
“I do not believe this, at least as it relates to Arizona. The NAHB / Well Fargo Housing Opportunity Index, by definition the share of homes sold in an area that would have been “affordable” to a household earning the local income (considering mortgage rates) is at 62% presently. This was below 30% in 2005. This was at a similar 62% rate in second quarter 2015. Home prices have risen, but not too significantly since mid-2013; meanwhile, rents have risen much more significantly.”Jim Belfiore, Zonda Advisory