According to Robert Shiller, this much:
This index is already adjusted for inflation. This could mean housing has always been way undervalued, or that restrictions on building have artificially inflated prices and thus made them more sustainable. I am sympathetic to both explanations, to a point. My guess is, that point was passed long ago.
About Lance
I want to thank everybody who has encouraged me over the past few years to do this. I doubt it will hold but a few people's interest, but that is okay with me. Special thanks go to Peter over at http://www.liberalcapitalist.com.
I value my privacy a great deal, so I will guess you will have to get to know me over time to find out much. I am in the financial services, wealth management, investing or whatever you want to call it business. I have children, my oldest is entering college.
I have no great or imposing academic background, my grades varied from high enough to get invited to an honors program at my university to frustrating enough to cause my father great grief. My major was history, with a minor in ethics. My main interest towards the end was in the history of economic ideas before life took a turn and I ended up never going on to graduate school. However, I have a fair knowledge of history, economics, investing and would probably be considered well read. My tastes are eclectic and I pretty much find the entire world interesting.
I have an enduring interest in how people learn about and analyze the world; my posts here will examine this topic in detail over time. I make no claims to be above the very biases and errors I see in others, in fact it is my belief that we are incapable of escaping them, only moderating their control over us.
I am a member of no political party, but I would broadly consider myself a man of the right. I am inclined to free market economics, limited government and a fairly narrow view of the role of the state. A small L libertarian if you will. However, if you are looking for broad based "the left believes..." or "wingers are so...." types of attacks on liberals, conservatives, neo-cons or whatever enemy you want to slam, look elsewhere.
Lance
lance, the small column width of asc makes images like that hard to read. Any way you could make the image link to a full sized version or to the source at marginal revolution?
Yeah I can do it. But unfortunately my platform for working with images (making thumbnails) is giving me some trouble and I haven’t taken the time to fix it. I’ll see if JD Johannes can give me some pointers.
If you think that’s overvalued you should check out some parts of Asia. I live in Taiwan and a crappy 40 year old townhouse runs US$ 500,000 – despite salaries being lower than the USA, and rents being very low (i.e. rent is better than owning.)
China is full of similar US$ 300,000 plus luxury villas (a.k.a. a normal house in the States) despite having more land available than Taiwan and much lower labor costs.
I keep thinking that there has been a huge bubble that has to pop, but all the Chinese keep telling me to buy a house…Is there just that much liquidity sloshing around, or is it truly a boom?