jayeff

At the risk of stating the obvious, an "investment" which doesn't allow you to buy more loaves of bread (or whatever) when it is liquidated, may be a slower way to lose money than other options, but it is not the profitable instrument the word implies (or at least that most of us hope it implies).

In this context that is irrelevant. The point of using inflation-adjusted prices here is precisely that - courtesy of inflation - apparently quite dramatic increases are normal (a dollar today buys roughly half of what it did twenty years ago). It is much easier to see whether the perceived value of something has actually increased, by removing that distortion.

I must have expressed myself badly, because even the couple of people who have agreed with me, appear to have assumed I was forecasting a bursting bubble. All I actually wrote was that those claiming the increases between 2001 and 2005 do not indicate a bubble, are by definition claiming a major, fundamental change in the housing market. That seems to me the side of this debate which is most in need of a defense, since 50-100 year economic trends do not generally change overnight, simply because people want them to.

The most I did was to imply that I am cynical and that is because I don't see that defense being adequately made. In fact I don't recall reading or hearing of a remotely similar change being claimed for any of the economic, social and political factors which underpin house prices. Your response did not address that vacuum.