CHART OF THE DAY: House Prices Are Getting Reasonable Again

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A straightforward way of determing whether a house is fairly priced is to compare it to what that house would rent for. It’s kind of like a PE ratio. As this chart from Whitney Tilson shows, price-to-rent ratios are finally coming back in line with historical norms. But this doesn’t mean home prices have bottomed. Like anything else, they’re prone to overshoot on the way down.

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