Personally, I prefer looking at prices of homes relative to renting the equivalent to ascertain value, not an academic exercise, which is misinterpreted by the original poster to mean we are at a new higher plateau.
Also, can someone ‘splain to me what a standard house was in 1890, and how to compare that to a standard house in 1975 ? Did they have Almond refrigerators and electric olive green ovens in 1890 ? What about shag carpet ? What about typical LTVs for loans prior to 1940 ? Has that changed over 120 years ? What were the FHA guidelines in 1915, or 1960 for that matter ?
The problem with a “statistic” like Shiller’s is that the system is not stationary over the length of the record he is analyzing. I would only consider the last 20-30 years of this chart, and I would also consider it with a large grain of salt, since inflation and changes in income distribution
are not considered.
