Historical Housing Prices Since 1890

I have to agree with the Van Housing Blogger, “I just can’t get enough of this graph“:

A History of Home Values

It’s great to see a graph that goes back so far and that also factors out the effects of inflation. Look like the annualized performance of homes since 1890 is: 100 \left(e^{\left(\frac{log(199/100)}{2006-1890}\right)}-1\right)=0.59\% (real return). Since 1950 it would be 100 \left(e^{\left(\frac{log(199/100)}{2006-1950}\right)}-1\right)=1.24\% (real return).

Here’s an comment to the Van Housing Blogger’s post by “rentah”. He/she says:

As freako has pointed out in prior threads, we need to know more about the ‘equivalent standard house’ to which Shiller refers. If it’s gotten smaller over the years because of increased density, or if it is now on less land, the Shiller analysis underestimates real RE returns.

I’m reiterating this even though I really like the Shiller graph and my own bias is that people overestimate how good an investment RE actually is, largely because they don’t have any other investments to speak of.

David Chilton is that you? That last part sounds a lot like the Weathy Barber, the fact that for some people their home is their only investment, or in some cases their own “good” investment that they have ever made.

“rentah” continues:

Regarding RE returns these next 5 years, well, the graph alone doesn’t tell us whether the crash will come in those 5 years, BUT the fact that we already know how much US housing has slowed, suggests the spike would be shown to have already turned on an updated chart, and when needle-spikes turn, they CRASH.
>50% correction coming up, Vancouver not exempt.

2 thoughts on “Historical Housing Prices Since 1890”

  1. I have seen a graph that compares housing prices to household income and indicates a long-term trend of housing representing a stable portion of income. If you know of a reference to that greaph, please send it to me.

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