We’re Now In the Second Biggest Housing Boom of All Time

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Over on the Twitter box, a reader asks if I can update a New York Times chart that I posted seven years ago. It shows average housing prices through 2006, and he’d like to see them through 2017. Well, so would I, and luckily for both of us, Robert Shiller keeps a spreadsheet of this stuff that he updates monthly. So here it is for the entire period since World War II:

The most remarkable feature of this chart is that between 1953 and 1997, average housing prices increased by zero percent. Zero. This is very much not what people expect to see. Conventional wisdom says that homes are always and forever good investments, but for nearly half a century that just wasn’t true. Adjusted for inflation, home prices were flat.

The second most remarkable feature of this chart is, of course, the insane Bush-era boom. Here in California we considered the 80s boom to be a very, very big deal. But it was a mere blip. The Bush boom was without precedent.

Finally, we get to the third most remarkable feature of this chart: the Obama-Trump era boom that’s happening right now. Compared to the previous boom it might not seem like much, but it’s already far larger than any other previous housing boom. And we have no idea how much further it has to go.

So what happens next? Are things really different this time, and home prices will stay permanently high? Or are we due for another housing bust? Beats me. Nor do I know what will happen if housing prices do collapse. It would be painful, of course, but how painful depends a lot on what kind of mortgage loans people are taking out; how much equity they have in their homes; and what kind of crap Wall Street is packaging all this stuff into. So far, things look OK on that front, so a housing collapse would mainly have an effect via the wealth effect, which would slash consumption. That would be bad, but only half as bad as the previous bubble, and there would be no financial crisis tailwind to make it even worse.

I don’t quite see how home prices can stay at their current level, which is historically very high, but I guess you never know.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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