residential land rent vs GDP: Shiller's buddy vs Shiller
- From: "sinister" <sinister@xxxxxxxxxxxxxx>
- Date: Thu, 04 Dec 2008 12:49:11 GMT
http://finance.yahoo.com/real-estate/article/106238/The-Future-for-Home-Prices
Key paragraph:
"Karl Case, an economics professor at Wellesley College whose name adorns the S&P Case-Shiller home-price indexes, has studied U.S. house prices going back to the 1890s. Over the long run, he says, home prices tend to increase on average at an inflation-adjusted rate of 2.5% to 3% a year, about the same as per capita income. He thinks that long-run pattern is likely to continue, despite the recent choppiness."
Since real per capital income growth can be taken as a proxy for real GDP growth (indeed, it's actually greater than GDP growth!), this is evidence in favor of the claim that the rent of land in the residential sector increases with GDP.
It's in distinct contrast to what I recall Shiller himself saying, namely that home prices don't grow much faster than inflation. (IIRC he claimed 0.5% faster, distinctly slower than long-term US real GDP growth.)
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