jpinpb, the data used in the chart was not adjusted for inflation. I just did a straight calculation:
ratio = price / rent
So, yes, relative to rents, house prices have gone up a lot since 1940. But note that price/rent ratios have stayed stable for long periods of time. It stayed at 0.4 for 30 years from 1940-1970. Then it stayed at 0.5 for another 30 years from 1970-2000. So the ratio seems to have gone up in steps. I’m not sure if we’re reaching a new step, though. That’s what I’d like to find out.
