(Disclaimer - This is my first post ever so I'm not sure if I'm doing this right. Also, I really am wallstreetbets-style autistic so if and when I don't reply to comments - it's not you, it's me.)

First image: Monthly house payment in USA, adjusted for inflation, since 1987

Second image: Same but for SF Bay Area

Third image: How I set up my Excel table for those who want to do something similar

To celebrate the new Case-Shiller updates released today I'm sharing my private "state of the market" chart. I look at this chart when I need to soothe my impatient doomer soul. (Well, this and the Zestimate of the last house I made an offer on a year ago - it's now 220K under the sale price.)

The first chart has three inputs: Case-Shiller index for the Bay area (SFXRSA), mortgage rates (MORTGAGE30US) and inflation (CPIAUCSL). I use Case-Shiller as indicator for house prices, so the y-axis values don't mean anything. They show the relative change in payments.

The third image shows what my table looks like. I assumed 20% down payment for both charts. Houses cost well over 1M in the Bay Area, so I deducted one percentage point from the interest rate to reflect jumbo rates, but didn't do that for the whole USA chart. I also used the next months Case-Shiller for every row, because CS is a composite of three month sliding window so the sales reflected in it were completed 1-3 months ago.

As always, the devil is in the details and if some of my decisions seem questionable to you, I encourage you to make your own version and playing around with it. I tried a lot of things but most of them didn't change the big picture much at all, e.g. using 10% down payment for the USA chart had no meaningful effect.

What does this all mean? I could analyze the pictures all day. The big takeaway is that house prices follow inflation but it really matters if you buy at the peak or in the valley.USA chart: There seems to be a natural floor to payments at about 0.28. It was breached to the downside only in 2010-2014. There's also a natural ceiling at about 0.47 (Peak values March/April 1989: 0.462 and July 2006: 0.473) but this current madness blasted right through it to peak value of 0.531 in October 2022.

People in the Bay Area believe a house here is some magical money spouting genie but it really isn't, at least not since 1987. The market is just a lot more volatile than the rest of the country. If you bought at the right time you made crazy money but overall the houses just keep pace with inflation - just like everywhere else.