House Price Expectations

From the department of stuff people are wrong about:

In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.

Do people understand what that would entail?


Of course housing in a particular location can become more desirable relative to housing elsewhere, but there’s no reason housing in general should increase in price much faster than the general cost of goods and services.