Inflation-adjusted housing is relevant only if wages go up with inflation. It really comes down to what people can afford to buy. Usually you can get a hosue for 3.5 x your wages.

The more accurate indicator to me is a reversal to the mean of per capita income/median housing price. This would give us a 50% correction at today’s wages. I don’t see wages rising much, so I stand by that forecast. Even if wages rise 5%, remember that all excesses overshoot before going to equilibrium.

Good analysis on that inflation stuff though. Housing has gone up 2-3% annually, and people say “with inflation” bec. that’s what inflation was always published to be. Assume the true inflation is 8%, whereas the gov’t says 2%. You could just as easily say that housing has lagged inflation by 6%. So I’m explaining why the inflation correlation to housing prices is not relevant at all. I hope this makes sense.