Wednesday, October 06, 2010

Housing Prices from 1970 to 2009 in the US vs. California as compared to Gold prices. Oct. 6th

ADP released their payroll numbers this morning for September and they were very disappointing because they reported a loss of 39,000 jobs. This was the first month in the past seven that there was an overall loss of jobs. Expectations were of a gain of 20,000 jobs for September. They said that they now expect the Unemployment rate to be 10% by yearend.

Also in the news this morning was the MBA Mortgage Applications number. It was down -0.2%.

Tomorrow, Initial Jobless Claims will be announced and based upon the ADP report we can expect disappointing numbers here as well. You know what that means? The stock market most likely will ignore the news! We don't want the American Public to feel depressed now do we. It's all about managing their psychology in the biggest experimental psychological game in our lifetime. You feeling better yet?

OK, I have put together several charts you might find unique. I looked up Nominal Housing Prices from 1970 to 2009 on a national basis and also compared California's Housing prices. In addition I calculated the Nominal Housing Prices for US and California versus the price of Gold to come up with a Housing/Gold ratio. Here are the charts below. The first is a comparison of California versus the US. They tracked closely with California always higher but during the peak time, California surged while the drop was even more severe than US overall.

The next chart shows the Housing to Gold ratio:

So comparing how Gold has risen and Housing prices have dropped, it looks as though the real value of Homes has diminished significantly in the past 3 years.

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