Last week, I graphed this data on a log scale but here it is on a standard linear scale which emphasises the exponential growth of housing prices before inflation. This behavior, along with bubbles in the market, makes residential housing look like a better long-term investment than it is. While a house is often the largest “investment” most people will ever make it is often a form forced savings combined with a hedge against inflation and when inflation is high your house value will often increase while your mortgage does not. Enjoy
Data is originally from Robert Shiller’s book Irrational Exuberance which is updated on his website.
by Visualizing Economics
