House prices vs. rents

Nominal home prices vs. nominal rents:


After yesterday's blog post, in which MacroMarkets LLC suggests national home prices are actually undervalued, I decided to post another home price graph on my website. This one compares home prices to owner-equivalent rent inflation (i.e. nominal home prices vs. the nominal amount they could rent for). Like my original housing graph, the price vs. rent graph suggests national home prices are still overvalued.

Also, despite the fact that Robert Shiller is chief economist at MacroMarkets LLC, his own graph available in a spreadsheet at irrationalexuberance.com suggests that home prices are still overvalued compared to their historic inflation-adjusted norm.

The owner-equivalent rent index is available at http://data.bls.gov/cgi-bin/srgate by entering series id CUUR0000SEHC.