The way I interpret this graph is that it demonstrates what housing appreciation SHOULD be when fundamentals are observed. If you were to draw a “line of best fit” (sorry if that brings old calculus demons out in people’s memories) through the entire graph you can imagine a straight line with perhaps a 15 degree or so angle with the x-axis. That is where we should be. Take that extreme right sided peak of current housing prices and imagine it falling to the extrapolated point on the best fit line. I don’t think it’s impossible to see prices adjust to that point. The other deviations on the graph are either very temporary, or associated with a cataclysmic cultural event, i.e Great Depression, WWII. You’ll notice that after the last unexplained peak 1n 1890 was followed by a 30 year trough with exactly the same slope of the line we imagined earlier.

I want to see houses become affordable, but in that context I find this graph frightening.