The Consumer Price Index for Rent of Primary Residence, compiled by the United States Bureau of Labor Statistics<br />and corrected for inflation, went up only 8 percent in 1997 to 2005, so unmet demand for housing services can’t explain the huge increase in real home prices.<br />Real home prices rose 75 percent from February 1997 to December 2005, according to the S&P/Case-Shiller<br />National Home Price Index, corrected for inflation by the Consumer Price Index.<br />But the explanations for what happened in housing are not, I think, to be found in the conventional data favored by economists<br />but rather in sociologically important narratives — like tales of getting rich through “flipping” houses and shares of initial public offerings — that constitute the shifting mentality of the era.<br />It doesn’t explain the 29 percent rise in real home prices since 2012 either,<br />because inflation-adjusted rents increased only 10 percent in that period.<br />These stories appear to have been broadly exciting to people who didn’t flip houses themselves but who appear to have begun to think<br />that stretching a little and buying a house with a large mortgage would make them wise investors.<br />How Tales of ‘Flippers’ Led to a Housing Bubble -<br />Get the Upshot in your Inbox<br />There is still no consensus on why the last housing boom and bust happened.<br />principle,” meaning “other people’s money.” He wrote: “Your objective is to control as much real estate as possible<br />while using as little of your own capital as possible.” In other words, borrow as much as you can.
