Long-term Perspective on House Prices

In the new issue of The Economists’ Voice, Robert Shiller has a piece on house prices: “Long-Term Perspectives on the Current Boom in Home Prices.” Here’s the picture that tells a thousand words:

Despite massive population growth over the periods shown in all three countries, there’s very little upward trend in home prices. Fluctuations in the real price of houses are clearly driven by other factors, and seem to be temporary; between 1900 and 2000 the real price of houses in the US was virtually unchanged. The rapid price appreciation of the past 5 years certainly looks odd…


UPDATE: For much more on this article, see Mark Thoma.