Rustico – Not quite infinity. Between 800K to 1.5 Mil I would guess.
What were house prices in the 1960’s ? I have some friends who have told me about the house they could have bought for 30K in Point Loma in the mid-late 1960’s. The 6% line projected backwards hits about 25K in 1965.
Who would have thought that home valued at 25K in the mid 1960’s might be worth 6x that in 1995 (at a market cycle bottom).
The funny thing is, my chart comes to essentially the same answer as Rich’s (i.e. that home prices are about 45-50% overpriced relative to where they should be).
I didn;t think this would be controversial
Maybe the plot is more believable if viewed on a log scale. In that case a constant rate of return is a straight line.
