To make the case
for housing price bubble deflation, here are a couple of graphs from JP's Real Estate Charts:
Not exact matches
Advocates
for excessive home
prices also point out that construction has become a bigger part of the British Columbia economy, equating any effort to deflate Vancouver's
housing bubble to act of economic sabotage.
Take the
housing bubble,
for example: The disconnect between average home
prices and wage growth had become massive, despite the fact that the fundamental link between the two is as old as time.
For some economists, the surge in home ownership,
house prices and credit without strong income growth equals only one thing: a
bubble.
The «search
for yield», i.e.
for better return on financial investments than the declining interest rate, thus led to the series of
bubbles & bursts: deregulated savings & loans (immediately), high - tech stocks (late 90's), mortgage derivatives — >
house prices (2000's).
If anything should be clear from the
bubbles of recent years, the greatest risks are not when
prices are depressed, the economy is weak, and investors are frightened, but rather when
prices are elevated and an unendingly positive outlook
for technology, or
housing, or global growth, or private equity, or emerging markets, or commodities seems all but certain.
At the same time,
prices for owner - occupied
housing have been basically stagnant
for years after plunging when the
bubble popped.
For example, Spain's
housing bubble and Greece's debt crisis have resulted in major drops on real estate
prices across the countries.
In Denver and Boston,
for example, home
prices are now higher than the peaks reached during the
housing bubble of the early to mid 2000s.
Following the peak of the
housing bubble in 2006 and the subsequent market collapse, U.S. home
prices declined
for six years.
The key intuition is that, by creating a
bubble in the market
price, savers» demand
for the
housing asset
for investment purposes imposes a negative externality on borrowers, who only demand the
housing asset
for utility purposes.
Las Vegas is a case study in the limits of the
housing bubble but also the reflection of a new economy driven by a demand
for lower
price real estate.
While no one knows
for certain, we do know that the over 1600 %
price increase year - to - date surpasses many other previous
bubbles, such as the dot - com
bubble of the late 1990s, and the recent U.S.
housing market
bubble.
And to date, little about the past few years of hyper - appreciation in real estate
prices — greater than that of
Bubble 1.0 — has little to do with fundamental, end - user, shelter - buyer demand
for houses «in which to live».
Don't compound them with bailout
for mortgage «victims» The
housing bubble that was fueled by multidecade low interest rates
priced many people out of their dream homes.
In Denver and Boston,
for example, home
prices are now higher than the peaks reached during the
housing bubble of the early to mid 2000s.
He found that in July, Peter Andersen of Andersen Economic Research Inc., also examined this risk and found that «the
bubble risk
for house prices in Canada is highly exaggerated and that new
housing is still very affordable in Canada.»
Even during the peak of the
housing bubble in 2006, the median sales
price for a home in Indiana was about $ 64,000, second lowest in the country next to Kansas.
He also assigned primary blame
for the
housing bubble to relaxed lending standards and views among Americans — consumers and bankers alike — that
housing prices would rise forever.
If people had known during the
housing bubble how little in the way of real
housing they were getting
for their dollar, they would have refused to pay the
prices being asked and that refusal would have brought
prices back down to reasonable levels.
@justkt - that article you posted is written in 2005 at the HEIGHT of the
bubble - of course it was better to rent than to pay outrageous
prices for houses.
At the same the government funded subsidies
for low income earners that further fueled the asset
bubble in a self - sustaining cycle possible due to rising
house prices.
Even during the peak of the
housing bubble in 2006, the median sales
price for a home in Indiana was about $ 64,000, second lowest in the country next to Kansas.
If bitcoin
prices fall, it will not be
for the same reasons as the other
bubbles since bitcoin is not yet embedded in the economy and the financial structure the way dot - com and
housing stocks were.
If Trudeau and Wynne try to counter rising
prices and demand
for homes brought on by demographic and economic factors, via policy changes, it may create a
bubble and then
housing crash in Toronto and Vancouver, cascading right across the country.
Yale University economist Robert Shiller, famous
for predicting the fall in
housing prices, cited farmland as his «favorite dark horse
bubble candidate» over the next decade in a spring 2011 article in Slate.
Mix volatile energy
prices, looming inflation and the reality that the
housing bubble, which has played a huge role in sustaining economic growth, has finally sprung a leak — and you have a recipe
for a consumer slowdown.
Many market observers have identified the dislocation between
prices and rents as both an indicator of the
housing bubble and as a tool
for helping to understand the relative affordability of these two
housing options.
«There is speculation that a sharp increase in
house flipping — buying a
house and fixing it up
for quick resale — may have contributed to last decade's
house price bubble.
When
housing prices skyrocketed last year, they entered what economists like to call a
housing bubble, in which
prices rise based on demand, which is great
for home sellers.
The shortage of
houses for sale is strong evidence against a
house price bubble.
In Denver and Boston,
for example, home
prices are now higher than the peaks reached during the
housing bubble of the early to mid 2000s.
Even after some of the air went out of the
housing bubble in the Bay Area in recent years,
prices in the most desirable parts of San Francisco and Silicon Valley stayed buoyant enough to remain out of reach
for most people.
Many believe the
housing market is currently overheated, and likely headed
for a
bubble and
price correction:
We really became landlords because our
house fell in value after the
housing bubble crash and we moved into a larger home
for our family and were able to get a foreclosure at a great
price.
The
bubble didn't just burst, it evaporated, so forget the
price you could have gotten
for your
house at the peak — unless you have years to wait.
The first report, by David Macdonald of the Canadian Centre
for Policy Alternatives, says Canada has a
housing bubble because
house price increases in Toronto, Vancouver, Calgary, Edmonton, Montreal and Ottawa between 1980 and 2010 «are outside of a historic comfort level.»
A continued drop in oil
prices, or even a tech
bubble burst, could easily curb demand
for housing in hot Texas markets, and take some of the air out of the sky high
prices.