Are we in a housing bubble?

 

Chapter 9 tells us that, in the long run, we should be indifferent between renting and owning.  In the above graph, the price of a housing is 40% higher than the price of renting.  I suspect Prof. Robert Shiller (famed bubbleologist who predicted both the 1999 stock market bubble and the 2007 housing bubble using a graph like this) would say we are in a bubble.  Here is a piece I found on the web:

'It would suggest declining home prices in the near future,' Shiller, who teaches at Yale University, told Bloomberg Television on Thursday. 'I wouldn't be at all surprised if house prices started falling.'