The natural trend for housing prices should be down, as technology makes equivalent houses cheaper to buy, and better transportation infrastructure (in theory) increases the supply of viable housing.
Not disagreeing with you on the general idea but there are other factors pushing up. Mostly to do with rising population. 'Existing' houses stand in places that will over time become more central, more developed & therefore more scarce.
These are both good points. I was wondering why the supposed trend was so flat. The answer is that there are so many other random factors pushing in both directions that there probably is no real trend.
It would probably be more reliable to predict the bottom by looking at the ratio of house prices to income. That shouldn't change too fast.
An interesting bit is that you'd need to use different samples to infer about the 'cost of housing' then what you would need to infer about the 'value of property.'
Most places, the cheaper houses are new developments on the city's fringe. Since a lot of people live there, you need to take them into account when looking at 'housing costs.' But you don't take into account new developments when looking at real estate as an asset. You're not buying 'housing' your buying 'houses.'
Existing properties can increase while cheap new houses keep averages down.
Any location can become desirable. As the population rises, so does the supply of desirable places to live. Chicago and San Francisco weren't even on the map two centuries ago. Within the U.S., differences in levels of "excitement" and cultural amenity between cities are narrowing due to modern technology, to the point where the decision of whether to live in New York, Chicago, Seattle, or Minneapolis has more to do with personal tastes and situations than with one city being more desirable.
As for existing houses becoming more central, I tend to disagree that this is inevitable. Many suburban and exurban houses are going to be abandoned as oil becomes scarce. Many towns and locations have died instead of developing. We tend to assume that existing houses will age well, but this is driven by survivor bias as we forget about those that are abandoned and die.
As for the long-term influence of population trends, if the population continues to grow, it will be too large for the planet's resources long before we run out of physical space.
Central Rome has been a more or less desirable place to live for more than 2000 years, modulo the odd barbarian invasion, plague, war, etc... Even the places that have waned in importance with time still usually have expensive city centers that aren't bad places to live.
> Chicago and San Francisco weren't even on the map two centuries ago.
But now that the tabula is no longer rasa, those locations are likely to be sought after - maybe more, maybe less over time, but over the long run, they'll attract people.
Rome was a notoriously unhealthy place to live in the middle ages. The surrounding countryside was depopulated in the disasters of the late Empire, and a lot of the farmland reverted to malarial swamps.
Certainly - it had its ups and its downs, but continued to be somewhere, and still is now. I would bet on it still being somewhere in another 2000 years.
My point is that housing technology is nothing compared to demand for good locations in terms of its affect on prices, and good locations have a lot of staying power.
BTW, those marshy areas in Lazio have been fairly marginal for a long time:
This is not necessarily true. The number of populated places also increases.
There are many, many more desirable places to live now in the US than there were 50, or 100 years ago. While desirability is subjective, I'd argue that the growth in the number of desirable places to live is outpacing population growth. The revitalization of many American downtowns, as well as the necessary reorganization of our land use, will further propel this trend.
Sure, for the same amount of house, other factors being equal. But that doesn't mean that the prices people pay for houses goes down, even if other factors stay equal, because people buy larger houses with more features for their money.
