Housing Prices in Terms of Gold | Chart of the Week
Studying housing prices in terms of gold, provides a better idea of when housing may be expensive or cheap in terms of gold bullion ounces.
Although the basic mechanism of a housing bubble is the same as for other asset bubbles, its effects for the real economy are particularly severe. This is because the bursting of the housing bubble affects negatively the balance sheets of the household sector. The bubble is credit-fueled, so when it bursts, it leads to debt overhang among the consumers. As they focus on repaying the mortgages, they do not take new loans, which leads to the slow recovery.
Source: YCharts, BMG Group Inc.