Chart of the day: Case-Shiller 2005

| 2 June 2008 11:00

Question: Could one see a bubble in housing back in 2005 when house prices were still rising?

Well, to answer that question, I took the S&P/Case-Shiller Composite 10 Index and mapped it the rate of inflation. See, Robert Shiller, one of the Case-Shiller index authors, said in his seminal book Irrational Exuberance that house prices over the long-term have grown a tad more than the rate of inflation. So, you’d expect house prices to rise about in line with the Consumer Price Index (CPI).

Let’s look at the 10 years of Case-Shiller vs. the CPI from Jan. 1995-Jan. 2005. What do you think?

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

Related Posts
More About: , , ,