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Robert Shiller explains that, while housing bubbles are a product of recent history, beginning after WWII, speculation about land values is as old as the U.S. Even George Washington had been a surveyor and founder of a subdividing company before becoming president.
Shiller explains that "land fever" arose when a promoter heavily subdivided a plot and generated "buzz" around it. Not until the 1920s did the media catch on and report on the sheer aggrandizement associated with such schemes: In Florida, for instance, jungle and swamp land was being sold to unsuspecting newcomers as perfectly buildable.
He goes on to describe how the misconception of land finitude has driven up housing prices, and may have led many to miscalculate the return on their investments in recent crises.
While housing is certainly tied to land, it is generally the structure itself that determines its worth in the vast swath of developments in the U.S. outside of densely populated areas. Interest rates and inflation also drive the housing market, and the likelihood of a rise in both make this "an auspicious time to buy a house with a fixed-rate mortgage," he argues.