Alan Greenspan said today:
Because of the degree of customization of homes, it is difficult to achieve significant productivity gains in residential building despite the ongoing technological advances in other areas of our economy. As a result, productivity gains in residential construction have lagged behind the average productivity increases in the United States for many decades. This shortfall has been one of the reasons that house prices have consistently outpaced the general price level for many decades.
So according to Greenspan, the price of houses has gone up because construction costs have gone up.
Although we certainly cannot rule out home price declines, especially in some local markets, these declines, were they to occur, likely would not have substantial macroeconomic implications.
So there we have it, don’t worry, nothing bad is going to happen. The Maestro said it himself.