Real Estate: Gold Ratio Falls to 30 Year Low – PragCap

27 JANUARY 2012 BY CULLEN ROCHE

After record bear and bull markets in both real estate and gold, the real estate:gold ratio might be telling us that we’ve reached an extreme trough in real estate prices.  The ratio hasn’t been this low in over 30 years (via Chart of the Day):

“Severely depressed 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 105 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, remains well within the confines of a six-year accelerated downtrend and remains very near its 1980 trough.”

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