One thing to keep in mind is that in the 1960’s and 1970’s, people’s wages went up along with rising interest rates and a fall in the value of the dollar. So, basically, the whole economy just got repriced and prices on everything went up in nominal terms. If you owned a house with a mortgage, you made money because the mortgage was priced in dollars at the time you bought and got paid back in dollars that were worth less as time went on. Today, employees have much less power to demand wage increases, so I don’t see wages increasing very rapidly. This will put downward pressure on the rate of increase in house prices. No matter how rapidly the dollar loses value, I don’t see employers give huge raises going forward into the forseeable future. I see food and energy prices rising much faster than house prices going forward – those commodities are traded globally and you can’t double up and share them easily, like you can with a house or an apartment. You can conserve commodities, but only to a point.
