This is why real estate tends to go up. It has a real value, the value of the house and the intrinsic value of the land. Land has a real value based on “economic use”, but most of the value is “what someone is willing to pay”.
As long as there are these tremendious optimists who will bid up land, real estate will carry a premium relative to economic value. Talk about a bubble – scorching desert property with no real proximity to viable economic centers. Most of the value is what the optimist sees for the future.