In this episode, we break down five key charts that explain why home prices are unlikely to fall and may continue rising. These insights go beyond surface-level assumptions and explore the real forces at play in today's housing market.

📌 Key Points Covered:

• Home prices are on a consistent upward trajectory and are likely to stay that way.
• The idea that homes are becoming unaffordable doesn’t mean values are unsustainable.
• Even during the 2005–2007 housing crash, most homeowners kept their homes—the real issue was risky loan structures.
• Fixed-rate mortgages offer long-term affordability, unlike adjustable or interest-only loans that triggered past crashes.

📊 Chart 1: Price-to-Earnings Ratio (P/E) of Stocks

• P/E ratios shifted permanently above 20 since 2016, showing market willingness to value assets higher.
• Increased transparency and retail investor activity changed how assets like stocks are valued.
• Real estate may follow similar trends—value isn’t always tied strictly to underlying income or material costs.

📉 Chart 2: Historical Mortgage Rates

• Contrary to popular belief, higher mortgage rates won’t crash the market—they’ll reduce inventory.
• Most homeowners have locked in low interest rates (2–3%) over the past decade.
• Higher current rates (5–7%) discourage people from selling, reducing resale inventory.
• This supply lockup supports high home prices despite rising interest rates.

🪵 Chart 3: Lumber Prices

• Lumber prices influence the cost of new homes, which in turn affects resale home prices.
• Historically, lumber traded in the $200–$500 range. Since 2020, the new range is $500–$1500.
• Industry changes, labor costs, and inflation support this higher price band.
• Builders now factor in high lumber costs into pricing, indirectly raising home values across the board.

🏠 Chart 4: Median Home Prices Over Time

• Despite short-term spikes, long-term home price trends show a steady, linear rise.
• The 2008 housing crash was an anomaly caused by financial system failures—not buyer demand.
• If plotted without the crash dip, the appreciation trend from 1991 to now is smooth and consistent.
• Recent “spikes” are simply a market correction catching up to historical growth patterns.

🏡 Final Thoughts

• Multiple indicators—mortgage behavior, materials costs, investor psychology, and historical trends—show that today’s home prices are not inflated in the way past bubbles were.
• These charts collectively support the case for a “new normal” in real estate valuation.
• Homeowners with low interest rates are unlikely to sell, which will keep inventory low and prices high.