You have no foundation in Economics?
If you want to look at housing prices versus inflation, you
cannot take only 1 specific year and compare, take the historical
price against inflation.
In the past housing prices have been speculative in US, housing
prices increase higher than the inflation rate, therefore prices of
houses are extremely inflated. If you mark year to year of housing
prices to inflation, at current levels the house prices are not
supported, that's why prices corrected itself. But if you look at
the figures provided, the growth rate of US housing prices far
surpasses that of the inflation rate.
Housing prices have been growing at an annualised rate of
approximately 5.7%, but has CPI (inflation) increased at 5.7% every
year? Go look at the CPI change column.
If you had bought a house in 1975 and kept it till 2008, you
will still have make gains against inflation. It's an effective
hedge against inflation.
http://mysite.verizon.net/vodkajim/housingbubble/US%20Median%20House%20Prices.xls
Property price can be affected by many factors, it
includes location, supply and demand, natural disaster,
economic growth and stability, government policies
etc,
While inflation on the other hand can be affected by war, market
liquidity, industrial cartel, currency fluctuation, interest
rate, taxation etc.
By claiming that inflation is a function of property price, you
are simply showing your lack on understanding in what you are
talking about.
No foundation in Economics? I think you should keep this
statement for yourself instead.
