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Home Prices Back in Alignment with the Big Mac

Home Prices Back in Alignment with the Big Mac
Home Prices Back in Alignment with the Big Mac
Tom Priester

After a wild ride two American standards back on the same page

Time to have a little fun and see where local home prices stand in relationship to the average cost of an American legend; the Big Mac. We have gone back and compared the median priced Jupiter home with the average annual cost of a Big Mac sandwich at McDonald's. And the results are fascinating.

Our base year for our newly formulated BMI (Big Mac Index) is 1999 when the median sale price of a home in Jupiter was $148,000 and a trip to the drive through at McDonald's for a Big Mac would set you back $2.43. Using the annual price change of a Big Mac we have carefully analyzed what the median priced Jupiter home should sell for if the price changes perfectly matched that sandwich with two all beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun.

Anyone who would have been watching the Big Mac Index would have known that home prices starting back in 2002 were getting a bit ahead of the sandwich. The red line in the chart shows the actual median price of a Jupiter home while the blue line shows where the Big Mac Index would sit. As we hit 2005 the home prices soared and were well over double what they should have been. That would be akin to four all beef patties and all the fixins. By the time 2011 rolled around home prices had slid well below the Big Mac Index and it was plain to see buyers should have been loading up their plates.

Right now the actual median Jupiter home for 2014 is priced at $298,000 while the Big Mac Index shows that home to be worth $300,956. Close but no doubt if you believe in the Big Mac we still have room for home prices to come up. Always interesting, always fun.

Fins up......

Tom Priester
Principal Broker

Paradise Sharks Real Estate
561.308.0175
tom@paradisesharks.com

www.paradisesharks.com