I wonder how good the data is from 100+ years ago. Where the heck could they even find it? If it is good data, I’m impressed they could go that far back.
This chart has been around for a long time. My main issue with it is that it is inflation adjusted based on official government figures. Inflation calculations have changed a lot since 1900. For example, in the early 1990’s the US changed the way inflation was calculated. I believe that the result is that inflation as currently measured is more than 1% less than the pre-Clinton method. I wonder how much of the recent spike is due to mis-measurement of inflation. It could easily be distorted by 15-20% if we under-report inflation by 1% per year since the early 1990’s.
I think the best measure of prices is to look at carrying costs of owning relative to rent. At some point, it will make financial sense as a business to buy and rent out property for profit. That’s what I would look at, not this inflation-adjusted graphic. This chart is good at demonstrating the excessive prices, but there are too many issues to use it quantitatively and apply it practically.
