none of you understand what he's saying. that's why you don't have nobel prizes and he does.

"It can't be true that homes rise 10 percent a year. If they did, in the long run no one would be able to afford a house."

well, you have to balance that off against inflation and, most importantly, what is now a really devastating level of wage stagnation. suppose wages go up 20% a year, and inflation is around 11%. the 10% rise in housing would merely almost catch up with inflation.

as it is, wages have been shrinking relative to inflation since about 1980. what that means is that, year after year, people have had less and less money. the value of the house may go up and down on paper, but that's precisely what the cause of the bubble was. it wasn't because the banks gave out too many loans. it wasn't because of deregulation (although the lack of regulation helped *burst* the bubble). it's because housing cannot increase while relative wages decrease; stagnating wages necessarily imply collapsing housing costs.

you can sit there and go "but....but...."

...but, no. you're wrong. the younger generation will not be able to afford the price you put down for your house, let alone the magic interest that built up on top of that. you need to realize that and adjust before you get burnt.

http://www.theatlanticcities.com/housing/2013/10/economist-who-just-won-nobel-prize-thinks-housing-terrible-investment/7240/