House prices also raise because we have more unaffected money: - food represents a smaller and smaller proportion of our expenses; - manufactured goods also b

House prices also raise because we have more unaffected money: - food represents a smaller and smaller proportion of our expenses; - manufactured goods also became more affordable, as they're produced either by robots or by 3rd world workers; - double-income families have become the norm. Since the housing market is essentially an auction system, with limited offer elasticity, it's natural that it swallows a large chunk of what could have been our disposable money growth. Now, there are other factors, especially in the USA, which will evolve: - the gold rush on estate as a speculative investment undoublty caused a bubble (although it only explains part of the price explosion). This seems now largely over. - by accepting to lend to everyone, banks have artificially increased the number of potential buyers, hence further increasing the prices reached by auctions. Now that those dummy buyers have played and lost with the banks' money, banks will have to acknowledge it as ARM-induced foreclosures unfold, and they'll probably be more careful before letting someone enter the house-buying game. So prices are very likely to go down, but not to go down as low as they were in the '70s, even in terms of income proportion.