Real Estate Charts
Here are graphs of inflation-adjusted, historical housing prices.
When I first noticed the U.S. housing bubble in spring of 2001, I never imagined it would last as long or get as big as it did. Real estate activity peaked in the summer of 2005, but home prices kept rising for another year. In spring of 2006, I couldn't believe that real estate prices were still rising even though housing inventories were also rising. Therefore, at a time when many people denied the existence of a housing bubble, I created these real estate charts in an effort to warn people that they were over-paying for real estate.
Now, over a dozen years after I first noticed the housing bubble and many years after I first created these real estate charts, the U.S. national housing bubble has completely deflated. Since the beginning of 2012, however, a new housing bubble has been rapidly forming in the western United States—especially in California.
This site aims to inform people about the current state of the real estate market with inflation-adjusted charts and spreadsheets showing today's real estate prices compared to their historical norm.
Inflation-adjusted house prices
The above chart estimates the market value of today's median-priced house over a 40-year period, thus controlling for the fact that housing sizes have changed over time. The thick red line represents real house prices. For those unfamiliar with economic terminology, "real" prices are prices that have been adjusted for inflation. The thick blue line represents nominal house prices. The thin lines represent the pre-bubble (1970-1999) trend lines.
Nominal house prices compared to owner-equivalent rents
This chart shows the change in nominal home prices vs. the change in nominal rents since 1983. Over the long run, home prices and rents should increase at roughly the same rate.
Inflation-adjusted mortgage rates
This chart shows the real (inflation-adjusted) cost of a 30-year conventional mortgage since 1971.
Data sources and methodology
- Latest quarterly, median, existing, single-family home price provided by the National Association of Realtors.
- Trailing house price index data provided by Standard and Poors (1987-Present), the Federal Housing Finance Agency (1975-1986), and Freddie Mac (1970-1974).
- Inflation data provided by the Federal Reserve Bank of Cleveland (1977-Present) and the Bureau of Labor Statistics (1970-1977).
The charts on this page estimates the market value of today's median-priced house over time. The trailing nominal prices are derived by taking the recent median price of existing single-family homes, as reported by the National Association of Realtors, and discounting it by the S&P/Case-Shiller National Home Price Index. From 1975 through 1986, the FHFA House Price Index is used. From 1970 through 1974, the Freddie Mac Conventional Mortgage Home Price Index is used. The S&P/Case-Shiller HPI, FHFA HPI, and Freddie Mac CMHPI are "constant quality" indices, so even though houses are built larger today than they were many years ago, these graphs automatically adjusts for this variation. The trailing inflation-adjusted prices are then derived by adjusting the nominal prices by the CPI-U Research Series Using Current Methods. Prior to Q4 1977, the CPI - All Items Less Shelter is used.