> SA asks:
>
>> abstracting for analytical purposes, couldn't you just use the
>> assumption that house prices will rise at the rate of inflation,
>> which is their long-term path?
>
> Sure, unless there's a significant divergence (which pretty much sums
> up the last 15 years, in both directions) ... and unless the average
> homeowner owns a house for, uh, the long-term. Which they don't.
> Congrats, you just proved my granny right: apples *are* redder and
> smoother than oranges!
I think you're missing the point here. Yes, prices fluctuate greatly even in the presence of a steady long-term trend, so long-term trends aren't much use for advising the *individual* shelter-seeker on the rent/buy decision. But if the question is whether *public policy* should favor homeowning or renting, then you *should* use the long-term trend. Yes, the long-term trend is an abstraction that doesn't correspond to any one individual's experience. But it's an average of the experiences of all the many individual shelter-seekers over time, and since public policy affects all those many variegated shelter-seekers, that's the best measure to use to inform the policy choice.
SA