> Your points actually contradict each other. Hmm.. No? Which parts contradicts which other? What I am saying is that the price of a good (say, a car) is not

> Your points actually contradict each other. Hmm.. No? Which parts contradicts which other? What I am saying is that the price of a good (say, a car) is not decided in a vacuum. It is merely an indirect side effect of the supply and demand optimum. What that means is that if the price of cars increases, it is a consequence of either consumers being willing/able to pay more for a car (demand driven) or cars being more expensive to build (supply driven). As I mentioned, this is not an absolute truth, since the term structure of the supply demand _could_ change due to external factors. I still mention that in the case of these goods, this is very unlikely. For housing, the main factors are 1) what the investment will yield (rent expectation) 2) what the investment costs (interest rates). If any of these factors (rent, IR) changes, it will impact the price. > Here's a graph of median personal income: > And here's a graph of median house prices: You are comparing CPI adjusted versus point in time dollars here...