This chart is a useful basic description of why the real estate bubble of 2021 is quite different than the one from 2006. 2006: House prices had grown way faster than money supply. 2021: House prices had grown in line with money supply.
If you adjust for inflation, then home prices just staying at current nominal values would be back to trend in about 20 months time
And this is one reason among a few for why I have been rather neutral on house prices than bearish on them. Obviously real estate is local, so I am talking about nationwide aggregates and generally linear markets.
Did you know that adjusted for residential construction costs, home prices are only up 5% since 2020? In reality they’re up closer to 40% But where some see bubble, I see inflation!