Despite the annoying adage about how they aren't making more land, the U.S. certainly has plenty of it. I expect us to run out of oil before we run out of building lots. Meanwhile, there's been some debate recently about long-term fluctuations in housing prices. The collapse of the U.S. housing bubble--which can be seen in the Case-Shiller index--demonstrates that housing prices cannot indefinitely outpace inflation. However, some people (Bill McBride, most notably) have pointed to areas in the country where home prices have stayed elevated. This chart, which is form the Philadelphia area, shows how good neighborhoods can demonstrate continued growth while bad neighborhoods can experience relative declines.
I see this play out in the Boston area. Neighborhoods like Dorchester and Roxbury were hit hard by the collapse of the housing bubble. Prices collapsed in wealthy neighborhoods, but never approached affordable levels. Meanwhile, zoning continues to constrain supply, so prices in general remain higher than national averages.
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