> Real estate prices are not being artificially elevated
Alas, they are. Supply and demand for housing is measured in units of currency, not people. Ask yourself, how many multiples of income can you borrow, with what kind of deposit? The ratio has shrunk over time, allowing roughly the same people to borrow steadily increasing amounts of money.
What's worse is that (in some countries at least) common measures of inflation don't measure house prices. The UK is an example of this. I'm unqualified to tell for sure, but I suspect some central banks have seen house prices as a way of keeping down measured inflation.
The solution (IMO) is a policy of relative decline - look to make house prices rise more slowly than wages for a generation.
The US does not include house purchase prices (the one-time capital cost), but does include actual rent or owner equivalent-rent (the ongoing/operating cost) in its measures of inflation.
This is entirely sensible consistent treatment, but often inadvertently or intentionally misunderstood.
Alas, they are. Supply and demand for housing is measured in units of currency, not people. Ask yourself, how many multiples of income can you borrow, with what kind of deposit? The ratio has shrunk over time, allowing roughly the same people to borrow steadily increasing amounts of money.
What's worse is that (in some countries at least) common measures of inflation don't measure house prices. The UK is an example of this. I'm unqualified to tell for sure, but I suspect some central banks have seen house prices as a way of keeping down measured inflation.
The solution (IMO) is a policy of relative decline - look to make house prices rise more slowly than wages for a generation.