Greenie agrees that there is no Housing Bubble (which makes me nervous).
Interesting observation from reader Rita:
"Being a baby boomer that have bought my primary residences from 1982 to now, I think apart from the extremely low interest rates, the change in tax law in ~1997? that allows the homeowner to keep up to $500K tax free capital gains from selling your primary residence and $250K for individuals is a key to the rapid shotup in prices.
Before this change in tax laws, we had to roll our house into a larger house to avoid the capital gains. My problem is: is there a cap for $1-2M homes in NJ that normal people cannot afford to buy even with the tax fee gains."
In other words, the change in tax policy is partially implicated in the home price runup.
CPI versus Home Prices
click for larger chart
Do note the spike at the right end of the chart
25 YEARS OF HOUSING AND THE ECONOMY. Click on the tabs to see how the
national average 30-year fixed-mortgage rate and CPI compare to the
growth in median existing-home prices.
Home Prices March Higher