Here's a very interesting take on the current housing bubble by Gary Schilling entitled "The Coming Collapse in Housing" and including a number of very interesting charts. http://www.investorsinsight.com/thoughts.aspx Introduction What Will Collapse Housing Prices? The Grand Disconnect 89 Booming Cities Where's The Unemployment From Housing? Two Price-Break Triggers The Fed to the Rescue? Some Observations on The Big Easy
The Beginning of the Article: By Gary Shilling I am convinced that the housing bubble is gigantic and will burst before long with massive implications here and abroad. In fact, it's the key to the global economic outlook. Setting the Scene House prices in recent years have leaped well beyond their normal relationships to the CPI. Even when the increasing size of houses--the McMansion effect--is excluded, inflation-adjusted house prices have jumped as never before in over a century. Furthermore, for the first time since the 1920s, the bubble is nationwide, and it's been driven by four national forces. First, the decline in mortgage rates. Second, the loose lending practices designed to accommodate those who have been priced out of the market under conventional mortgage terms.
Great article - thanks for the post. Has Schilling been bearish stocks/bullish bonds for a long time? Two points that he makes are really scary: 1) The thirty year will have a total return of 50% over the next two years, and 2) Housing prices have not even begun to fall yet. This is a good read - regardless of your leanings.
I have an idea how to make the RE mkt more efficient and transparent. 1. Get rid of listing brokers or create a public awareness campaign of how sellers can save 3% in commission by listing their own house on mkt. They add so much fluff to the transaction. Sorta like the time when Merrill charged you $120 to sell 100 shares of IBM instead of 50 cents thru IB. 2. Get rid of "fluff up " prices by recording purchase prices NET of sellers concessions. Eg. I want to sell house at $500, buyer says I will buy your house for $510 and give me 10k in sellers concessions. This screws up mkt data giving the perception that mkt price is going up.