[debatem1]

Just to clarify: that isn't 7% per year. That's 7% per decade.

To make it clearer what I'm saying, my parents bought their house in South Carolina in June of 2009 for about $130,000. Last month it went at just north of $195,000. If you had done exactly the same thing in Seattle and were subject to the median growth in housing prices that home would have sold last month for $205,000.

It's not chump change, but it isn't a night-and-day difference either. What I think it underscores is the difference between the actual problem we face (homes here are expensive) and the symptom we expect to see from theory (demand has skyrocketed -> home prices are skyrocketing). Because we don't see the symptom predicted by theory, I have to question whether the remedy the theory calls for is appropriate.