Hello fellow Rebel capitalists hope you're well. I think most of you would agree that the housing market is in a bubble.

So the question is when it pops, how far will prices fall? And it's actually a very easy question to answer.

All we have to do is look at history.

So to start, let's look at a chart that I used on today's whiteboard video.

This is the Case Schiller Home Price Index in nominal terms.

But what it does, interestingly enough, is it compares nominal home prices just simply to the

C. P. I. The rate of inflation, as the government admits to. Now this chart goes all the way back to 1950, the late 1940s, July 1947.

And I want you to pay very close attention to the far left hand side of this chart.

I think hopefully Josh can you see my pointer? We'll assume that you can.

Okay the far left hand side of the chart and I want you to notice all the way till we get to the late, call it 1990s.

And what you'll see, what you'll notice is this red line stays awfully consistent with that black line. It's almost like there's a very strong correlation

between home prices and the rate go up in real terms

i mean it's almost like prior to nineteen ninety seven we'll call it

the

home prices

didn't really go up in real terms in fact they didn't. They were pretty much flat. And they were flat, not just going back to

1950. They're flat going back to the end of the 1800s,

1890 to be specific.

So from 1890 to 1997, home prices flat when you adjust for inflation. So again, what we can conclude is that in the

natural state of the economy, home prices go up with the rate of inflation. And so the

next question was, well, why, why is that? Why is it that home prices really don't appreciate they only inflate?

Meaning they go up to the rate of inflation?

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