The past and future of home prices, or how no one remembers history

In many areas of the country, home prices are going crazy.

Or at least that’s the narrative.

I just discovered an amazingly engrossing interactive chart by The Economist where they show home prices in various U.S. cities as a function of time and other metrics. The picture it paints with home prices is one that matches people’s feeling: prices are going up and up.

From 2010 to 2016, median home prices in Portland rose by over 20%.

Sucks to be in San Francisco.

I’m not here to dispute those numbers. What I’m here to dispute is how short people’s memories are.


There’s been a low-grade panic in the market around me. It’s not uncommon for me to hear, “I need to buy now or else I’ll never be able to afford to buy ever.

Now, that feels a little hysterical to me. But more importantly, it shows that people don’t remember their history, even their recent history.

And I can illustrate this with a photograph I took in 2010.

Flashback to 2010

In 2010, I was visiting Portland, deciding if I wanted to move there.

One day, wandering in the SE neighborhoods, I chanced upon a house. It wasn’t a particularly beautiful house, though it wasn’t ugly. It was small, modest, reasonably sized.

And it was for sale.

I don’t know why exactly, but I was moved to take a picture of the house, along with the for sale sign.

Just a simple house for sale. (Click to enlarge.)

I didn’t realize at the time just how interesting this photo would become.

Take a look at the for sale sign. What do you notice?

Close up of the For Sale sign. (Click to enlarge.)

The price was originally $295,000, but it had been slashed to $269,900.

Now, to set the scene, this house is in one of the more desirable areas in Portland. Most people I know want to live around here, and used to (including me), but don’t anymore (including me), because it’s much harder to afford.

But just a few years ago, the housing market was so bad that this house in this desirable neighborhood couldn’t get a buyer, and the price had to be lowered to attract buyers.

Don’t panic

For fun, I looked on Zillow to see what the house ended up going for, and found that it went for even less: $264,500.

Then, for fun, I saw what the house was (allegedly) worth today. At the time of writing, it was: $462,063.

That’s a hell of a jump.

If I could have told you that if you had bought this house that it would rise in value by 75% in 7 years, you’d unquestionably have gone in if you could.

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But back then, I remember it well: everyone saw the bottom dropping out. No one saw the future.

This is what people saw. Here is the same chart as above but from 2005 to 2010:

It still sucked to be in San Francisco, but for different reasons.

This was only 7 years ago. No one is remembering the past.

The same difference

What might things be like 7 years from now? Do you really think it’s going to be more of the same? You think your place is unaffordable, and that it’s only going to get worse from there?

Look to history.

You think the stock market is only going to go up from here? Or only going to go down from here?

Look to history.

You think that “this time it’s different?

Sure, look to longer trends. But know that the path from there to here was not a straight line, and the future will be likewise. This time has always been different. And that means more of the same.

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