Loading ...Gold Real estate ratio
Hey Tenters,
Real sorry about my delay it replying to comments.
I have been knee deep in it at work.
The charts measure number of ounces of gold (In USD) to buy and average home in the US.
Right now, we are seeing an average home in the US go for 200 ounces of gold.
With Mortgage rates on the climb, Layoffs/bankruptcies on the rise, inflation and taxation increasing; people are going broke, and I believe that is/will choke the life out of real estate.
With the gold price in a bottoming process, and IMHO will be rising in the next few years; My thoughts on this chart tells me that we have had a small upward bump in 2012/2013 and that the ratio is going to reverse to the downside very soon. Previous lows have been 100 ounces for a house … I am expecting to see this slashed to the downside, maybe 50 maybe less???
In Weimar, at real estate’s bottom, you could buy a 4-bedroom home in the nicest part of Berlin for 4 to 5 ounces of gold. In Connecticut, you could purchase homes for 1 ounce of gold. Not predicting those lows, just saying that it can go lower than one believes is possible. My guess is hard bottom for RE in 2025.
Look at the GOLD:DOW ratio. in 1980 it was 1:1 and in 2012 it bottomed at 8:1. I still see this coming down hard to 1:1 or lower. That will involve a combo of Gold increasing in price and Dow dropping in price. Gold is currently at 18:1 and it will drop along with Real estate prices, IMHO.
Cheers and have a great weekend fellow Tenters 🙂
Thank You Rob Walnut for bringing this discussion to the tent
What is MORE important to us ALL…than the Gold to House Ratio
And yet it not something tracked here …until now…Cheers Sir Rob
Great info and if there are any younger people looking to buy a home but fear they will never be able to afford the down payment and mortage payments here is a suggestion. Start putting your savings into gold bullion coins instead of the bank and in a year or two you might be able to then afford the down payment.
Great Post.
Thanks Rob. I tend to agree with you too. Just for the simple obvious fact that home prices are high and gold prices are still low. So in the most general of terms that should indicate to us the direction of the ratio although timing is the factor most difficult to grasp. Rates will keep rising if the yield charts are valid. So home prices cannot help but fall. Furthermore, a recession will put added downside pressure on homes as unemployment increases.