Using quarterly data from 1960 (United Kingdom), 1963 (United States), and 1977
(Japan) through the second quarter (Q2) of 2010 (all three markets), the authors
examined long-run mean-reverting relationships between house prices and
inflation, disposable income, GDP, and rents. At the end of Q2 2010, U.S. prices
were below their mean-reverting levels and at the lower end of their historical
range. Equivalent U.K. and Japanese prices were at or slightly above their
mean-reverting levels.