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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Everything about this current recovery is FAKE
Median wages down 10% in the past several years
Trillion dollar student loan elephant in the room
Youth un/underemployment at record levels
Inflation underreported by at least 50%
Millions and millions of vacant houses
Don’t forgot the massive household debt. We have decades of deleveraging ahead of us.
“Millions and millions of vacant houses”
Apparently there is a shortage of arsonists.
Apparently there is a shortage of arsonists.
Has anyone ever burned down a house on purpose if they could live there for free and wouldn’t get any of the insurance money if they torch it?
Why do evicted home owners trash the house before they leave? For spite or just because they feel cheated when they see the bankers getting millions in bonuses.
All I am saying is that statistically I would have expected more arson, especially back in ‘09-’10 but it never happened. Just another one of life’s little mysteries I guess.
Arson was big before forensic science went mainstream. I’d wager far more consider taking out the property than actually lose perspective and go through with it. Besides sometimes innocents die. I think as long as they still have something to lose, even the mentally unstable hesitate on that route.
http://fox59.com/news/stories/south-side-disaster/page/2/#axzz2SuNoUOQX
Consider how quickly this ^^ incident was solved.
In Texas, to be an arson expert you only need to have gone to a lot of fires.
Some just want to watch it burn.
Apparently we aren’t talking about Detroit.
Squirming debt junkies in a massive credit contraction.
Line #3 is the most worrisome and potentially the most destructive to all of us…
Agree. Not only are they underployed, they needed expensive college to get their underemployment.
I’ve read a couple articles which still espouse a college education — don’t even think of dropping out — because people will college still do better than non college. Well it’s true but it’s BS.
1973: College —> entry job with promo to good job + maybe a little debt
1973: No College —> Applebees job + no debt
2013: College —> Applebees job + $100K debt
2013: No College —> no job + no debt
Debt-Junkie,
How much did you pay for your debt-dump?
How much did you pay for yours?
And in walks all the drama queen. How cute.
Answer. The. Question.
You. Are. A. DramaQueen.
How much did you pay for your depreciating house(s), Mr. Builder?
I seem to recall you claim to own three. I assume at least some are in high-property tax NY. How are you surviving your massive losses and carrying costs?
Don’t hide from the question. Just answer it.
Liar,
We have plenty of houses.
Now ANSWER the question drama queen.
2013: College —> Applebees job + $100K debt
To be fair you can get through college without 100K of student loans. But overall the point is correct. You now need a college degree to get a lucky ducky job.
Not quite true: wife 1973 no college $109K now retired.
Just out of curiosity, what was her job?
Sales jobs never needed a degree until recently.
Or
2013: College -> no job because you’re overqualified + debt that can’t be discharged in bankruptcy
2013: No College -> win the ‘lottery’ to get the lucky ducky job
Foreigners Buying Half of London New Homes Prop Up Building
Half of London’s new-home buyers come from abroad as the city’s reputation as a safe haven attracts rising investment and sustains development.
Foreigners spent more than 3 billion pounds ($4.7 billion) on new homes in the U.K. capital last year, a 25 percent increase from 2011, broker Jones Lang LaSalle Inc. (JLL) said in a statement today.
Who are these people? Are we watching the money centers buying up assets to rent back to the 99%? Are they Japanese fearing they hold what will be the first currency to collapse and don’t feel confident about alternatives?
It goes to show that not all is well in the so called “emerging economies”. I’m sure that along with these cash purchases are large “rainy day” bank accounts with large London based banks.
How long from now until when the GSEs are finally wound down?
Blacks picked for housing finance and transportation
Written by STAFF REPORT
Thursday, 09 May 2013
RALEIGH, N.C. (AP) – President Barack Obama has called on a Capitol Hill veteran seasoned in business, law and civil rights to head the federal regulatory body that oversees the two national mortgage lending behemoths behind most new mortgages. Obama on May 1 picked U.S. Rep Mel Watt, 67, a Democrat from Charlotte, N.C., to run the Federal Housing Finance Agency.
…
Would anyone who opposed Mel Watt’s nomination to run the FHFA automatically qualify as a racist?
from The Atlantic:
President Obama’s decision to tap Rep. Melvin Watt, D-N.C., to head the Federal Housing Finance Agency ensures that, if confirmed, he will be playing a pivotal role in housing policy. But it also spotlights the awkwardly shaped congressional district he will be vacating, one of the most gerrymandered in the country. The district was originally drawn to connect scattered African-American precincts in towns from Gastonia 160 miles south to Raleigh-Durham. It now covers a smorgasbord of disconnected metropolitan areas, including parts of the cities of Charlotte, Winston-Salem, Greensboro, Lexington, Salisbury, and High Point.
Link:
Mel is a Citibank trust fund baby.
An old friends daughters
What about your friend’s daughters?
If there is no bubble, how come so many MSM writers devote so much print space to discussing it?
I suppose it is a good way to sell news copy, while venting their irrational Bernanke hatred.
There appears to be a serious logical flaw in Krugman’s argument, which seems to presume the Fed is in full control of the long-term end of the yield curve.
As for the “irrational hatred of Bernanke” theory, why would we expect anything less from Krugman than to float a bizarre strawman in defense of his fellow Princeton faculty club member?
New York Markets Open in: 0:50:04
Pre-Market Indications | Analyst Ratings
Futures: S&P 500 +0.1% DOW +0.2% NASDAQ +0.1%
Krugman: No bubble, just irrational Bernanke hatred
Irrational Bernanke hatred contributes to bond-bubble talk, says Krugman
May 10, 2013, 8:25 AM
With U.S. stocks hitting all-time highs and bond yields under pressure, bubble talk is rampant. But you shouldn’t pay any attention to it, according to Princeton economics professor and New York Times columnist Paul Krugman.
In his Friday column, Krugman writes that there “definitely” is no bond bubble and is “probably not” a stock bubble, either.
The Nobel laureate takes a stab at defining a bubble, calling it a situation in which asset prices appear to be based on implausible expectations for the future. Think of dot-com prices in 1999 or housing prices in 2006. In the latter case, housing prices only made sense if you thought home prices would continue to significantly outpace buyers’ income for years.
When it comes to bonds, you wouldn’t want to buy a 10-year Treasury at a yield of less than 2% if you believed the Fed would be raising short-term rates to 4% or 5% soon, notes Krugman notes, who then asks why you’d believe any such thing:
There are several reasons for the bubble fears, but one may have something to do with what he describes as a “deep hatred” for U.S. Federal Reserve Chairman Ben Bernanke “and everything he does.”
…
Note that this represents yet one more shoeshine-boy moment for the related housing bubble:
A Nobel-prize winning economist comes out of the closet as a bubble denialist right at the point when the reflated bubble gets too big for MSM financial journalists to ignore.
Related question: Are MSM-favored economists getting dumb and dumber as history progresses?
Based on the money they’re making, they seem to be getting smarter.
Good point. It’s useful to keep the perspective that this is a dog-and-pony show, and the MSM-annointed experts who make asinine commentary on it get paid handsomely for their effort.
They’re not getting paid to predict what will happen. They’re getting paid to try to influence what will happen. “Stocks and houses are going up, so you better buy now or you’ll get left behind….”
Whether or not there is a bubble, there apparently is a rising dollar, a U.S. stock market hitting new highs on a daily basis, and long-term Treasury yields in near-record-low territory. And unemployment is falling very quickly for good measure.
Somefing’s gotta give — or can Goldilocks live forever?
Unemployment is not falling. The official reported statistic is falling.
Bingo
High & Low Finance
Challenge to Dogma on Owning a Home
Paul Sancya/Associated Press
Home buyers in Grand Rapids, Mich. Economists see a downside to high homeownership levels.
By FLOYD NORRIS
Published: May 9, 2013
Homeownership is a good thing, for the individual and for society. Or so American governments, whether Republican or Democrat, have long believed. The benefits have been cited repeatedly in justifying the existence and expansion of the tax breaks given to home buyers.
But maybe it isn’t nearly as good as had been thought.
A new study by two economists concludes that rising levels of homeownership in a state “are a precursor to eventual sharp rises in unemployment in that state.” As more homes are owned, in other words, fewer people have jobs.
The study, by David G. Blanchflower of Dartmouth and Andrew J. Oswald of the University of Warwick in England, does not argue that homeowners are more likely to lose jobs than are renters. But it does argue that areas with high and rising levels of homeownership are more likely to be inhospitable to innovation and job creation and to have less labor mobility and longer commutes to work.
“We find that a high rate of homeownership slowly decimates the labor market,” Professor Oswald said.
…
Is homeownership a good thing for the individual and for society?
Are mindless liars like you good for the blog and for the blog readers?
Did the advantage of a paid-off house make an appearance in any of these studies?
You’re busy today my corrupt one.
Is homeownership a good thing for the individual and for society?
If mobility of the labor force is the most important issue, then renting is good for both the individual and society.
But is mobility of the labor force the most important issue?
And who owns the houses if most people rent?
Treasury yields are staging a strong uptick (prices crashing).
10yr yields Monday 1.64% - today 1.90%
Why?
Go look at a chart of TLT and TBT or TMV
“10yr yields Monday 1.64% - today 1.90%”
No way! The Fed is gonna keep those long-term rates in the cellar until at least 2015!!!
P.S. Just for fun, I threw together a little spreadsheet yesterday to explore the effect of higher (or lower) rates on T-bond prices. If my calculations are right, that yield increase since Monday represents a 1.3% loss on the 10-year T-bond.
A rough rule-of-thumb at current yield levels is a 1/2 percent capital loss for every 10 bps increase in yields (e.g. a move from 1.64% to 1.74% reduces the market value of a 10-year T-bond by 1/2 percent).
‘Moody’s shows the divergence between corporate revenues and spreads…Their conclusion – high yield bonds might actually be susceptible to reflecting the name that they less commonly referred to as – junk bonds: ‘Until the global composite PMI posts significantly stronger readings, the high yield bond spread is vulnerable to a pronounced re-widening.’
http://seekingalpha.com/article/1422911-moody-s-high-yield-bonds-are-mispriced?source=yahoo
More like .9% for 10bps. 26 bp backup is a loss of 2.34%
Everybody knows the wheels will come off if the 10yr. moves too fast. Rate of change is more important than actual yield change.
“More like .9% for 10bps. 26 bp backup is a loss of 2.34%.”
You reminded me of a calculation error in my spreadsheet. I’ll have another look later…
Fixed it. Now I match the 0.9% for 10bps, but only get a loss of 2.18%, not 2.34%, on this week’s price move. This most likely reflects that you used a linear projection off the 0.9% loss for 10bps (26 bps X 0.9%/10 = 2.34%) while I used the actual values of the bond at respective yields of 1.64% and 1.90%. Since value is a convex decreasing function of yield, extrapolating off the secant (as you did) overstates the loss.
P.S. Here is the MS Excel formula, in case you want to try this at home:
=-PV(Y/2,2*T,C/2,F), where
Y = yield
T = term (e.g. 10 yrs, 30 yrs)
C = annual coupon
F = face value of bond.
Don’t know why the negative sign is needed to make the answer turn out positive; maybe MS Excel documentation has a good explanation?
P.S. If I have my calculation straightened out now, the 30-year dropped by 5.25% from May 1 today, thanks to the yield increase from 2.83% (on 5/1) to 3.1% (on 5/10). The rule of thumb for the 30-year at current yields is a 2% loss for 10 bps increase in rates. The secant approximation in this case is
(310-283)*(2%/10) = 5.4%.
Funny, isn’t it, how a 5%+ crash in 30-yr Treasurys earns nary a mention in the MSM, while a 5% crash on the DJIA would be a financial holocaust?
More fun facts from my handy-dandy spreadsheet:
Anyone who bought a 30-year T-bond on May 1, 2013 and held on until the yield reached 5% would roughly* realize a 33.5% loss; hang on until the yield reaches 6% for loss near or over 40%.
* Roughly because there will be less than 30 years to maturity when 5% is next reached.
Once the 30-year yield reaches 6.7%, those who bought on May 1, 2013 will be down by 50% nominal; a similar 50% loss on the 10-yr won’t happen until yields reach about 9.5%.
An old friends daughter who survived several years of job cuts and thought she was safe has been let go with most of her upper management division,but not to worry the economy is getting better, just look at housing. Right!!!
Had a call from a business owner in SF who said that the quality of new hires has never been better in the SF area. It’s jobs that people need, not more housing.
business owner in SF who said that the quality of new hires has never been better in the SF area ??
Absolutely correct and throughout the valley I might add….
Amen Salinasron!
It’s jobs that people need, not more housing.
How do we give people more jobs?
Does it involve cutting taxes on the wealthy? Because that’s already been shown not to work very well.
No, it’s more H1-b work visas.
Cut the work week in half, double the number of jobs. Boom! (please keep the pay the same)
Nobody said it was more housing we need. It’s more expensive housing we need. Higher prices- the cure to all that ails the economy!
Had a call from a business owner in SF who said that the quality of new hires has never been better in the SF area.
So much for the canard that “there’s no one to hire”.
Whither gold, and why? And would now be a good time for dips to buy?
Gold - Electronic (COMEX) Jun 2013
$1,432.30
Change -$36.20 -2.47%
Volume 94,627
May 10, 2013, 8:53 a.m. EDT
Gold futures sink as U.S. dollar soars
BNP cuts gold view, but says $1,600 will be reached again
By Barbara Kollmeyer and Carla Mozee, MarketWatch
MADRID (MarketWatch) — Gold futures fell sharply on Friday, as the U.S. dollar extended its rally against the Japanese yen.
BNP Paribas cut its gold price view, but said the metal will be trading back above $1,600 an ounce in six months.
…
Gold futures fell sharply on Friday, as the U.S. dollar extended its rally against the Japanese yen.
In Uncle Buck we trust!
I never get these too-clever-by-half predictions to the effect of “gold is selling off today in a huge crash, but will be back up to a much higher level in several months from now.”
If everybody knew that gold was going up, wouldn’t they be buying today? Or is there a special club of especially bright investment banksters who have a better crystal ball than everyone else on the planet?
Makes absolutely no sense whatever…
Black gold isn’t looking so hot, either.
May 10, 2013, 8:24 a.m. EDT
Oil tumbles as dollar gains, OPEC gets cautious
By Barbara Kollmeyer and Michael Kitchen, MarketWatch
MADRID (MarketWatch) — Losses for crude-oil futures deepened on Friday, as a stronger U.S. dollar and supply concerns helped dampen appetite for the commodity.
As well, the Organization of Petroleum Exporting Countries left its key oil and supply demand forecasts steady, but warned of headwinds to come that could change its outlook.
…
Owning Tesla stock is the new gold!
Gold down $1,424 -$44(-3.01%) TSLA up $7.55 @ $77.00sh (+11.00%)
And would now be a good time for dips to buy?”
I would say no the trend is your friend and this trend is down
Mr. Ben Bernanke,
Because the Federal Reserve monitors blogs, you probably know we here at the the HBB ponder the future of house prices, among other things. Since you and the President have taken it upon yourselves to drive house prices higher, I thought I’d cut to the chase and ask you how much I should pay? You may know that house prices here in Flagstaff are really high compared to local wages. But the President has an answer to that; the new subprime ObamaLoan!
So with funding on its way, and market forces wiped away with trillions of printed money (thanks to you) and artificially low interest rates (also thanks to you), I just need a hint on how much to borrow. See, I don’t want to be left behind. I want to get in. And I understand your position is that this is going to save the economy. Boy, I want some of that glory!
So how much? $500,000 should create a few jobs in Flagstaff, right? And if millions of us borrow that much, happy days will be here again, right? I promise you and the President that if you give me an ObamaLoan, I will submit multiple offers, over asking, even if no one else is bidding for the house. And if you’ll let me, I’ll borrow and buy multiple houses, and not even rent them out so as to keep inventory low.
Anyway, just shoot me an email and let me know if $500,000 is too low. I’m really glad you know just how much houses should cost, all over the country, at the same time.
Ben
Beautiful.
So how much? $500,000 should create a few jobs in Flagstaff, right? And if millions of us borrow that much, happy days will be here again, right? I promise you and the President that if you give me an ObamaLoan, I will submit multiple offers, over asking, even if no one else is bidding for the house. And if you’ll let me, I’ll borrow and buy multiple houses, and not even rent them out so as to keep inventory low.
Loved this part!
P.S. I don’t hate Ben Bernanke.
But with bubbles blowing right and left in every corner of the global economy, U.S. household home ownership and labor market participation plummeting, and the greatest U.S. wealth gap since 1929 in the wake of the great Wall Street bankster heist of 2008, I can’t say I much care for his policies, though.
Beautiful, GS.
You really gotta get a Peter Schiff gig making the network rounds. America needs an injection of sanity.
I’m sure it’s an innocent oversight Ben, but you forgot to promise Mr Bernanke that you will pay back that loan.
That’s easy, because when I buy these houses with my ObamaLoans, my wages will go up. Bernanke said so.
Not only that, but after a few years the houses you bought will be worth 3x what you paid for them. You’ll then be able to refinance them, pay off the loans and buy even more real estate.
Hello realtard.
May 10, 2013, 5:20 p.m. EDT
Policy should be tightened, Fed’s George says
By Ruth Mantell
WASHINGTON (MarketWatch) — The Federal Reserve should tighten monetary policy, or the central bank risks damaging longer-term economic growth, the president of the Federal Reserve Bank of Kansas City said Friday, according to a Dow Jones report. “Continuing this current policy outside of a crisis, outside of a recession, poses risks for us in the long term to achieve our objectives of sustainable economic growth,” George said, according to Dow Jones. The regional Fed bank president was speaking at the Wyoming Business Alliance. Last week, George was the sole dissenter on the Fed’s vote to continue its $85 billion-a-month asset purchase program, citing concerns about an ongoing high level of monetary accommodation raising financial and economic risks, and possibly increasing long-term inflation expectations.
The Fed
Why Ben Bernanke Still Worries About Wall Street
By Peter Coy
May 10, 2013
The bulls are running on Wall Street, but the chief of America’s central bank worries that the market remains dangerously fragile. Federal Reserve Chairman Ben Bernanke explained why on Friday, May 10, in a speech in Chicago at the Fed’s branch there.
Here are five things that nag at Bernanke, in his own words.
…
I think we’re getting close to a blow-off. This is all completely unsustainable. Look at how screwed up things are around the world. The central banks are just pumping, pumping, pumping liquidity. There are massive distortions in commodities, and everything else. Something really, really bad is going to happen. The top 1% are getting fantastically wealthy right now, while the majority are getting hammered.
“Something really, really bad is going to happen.”
No question. I’m fielding emails from people who are completely detached from monetary, economic and fiscal policy who are saying to me that something is not right.
There is a major reset coming; the breadth and depth of which cannot be understated. Think about it. This is 30 years worth of wound up, overleveraged, speculative positions that are global in scale that will unwind. The cracks have been there for years and now they appear outside the US. This has been a confidence game domestically for a very long time. Confidence(public stupidity) is what gives life to and prolongs the charade. By virtue of the fact I’m recieving emails expressing doubt and skepticism tells me the Great Unwind is imminent.
U.S. NEWS
Updated May 10, 2013, 7:19 p.m. ET
Fed Maps Exit From Stimulus
Timing of Wind-Down Is Uncertain, but Focus Is on Managing Unpredictable Market Expectations
By JON HILSENRATH
Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy—an effort to preserve flexibility and manage highly unpredictable market expectations.
Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.
The Fed’s strategy for how and when to wind down the program is of intense interest in financial markets. While the strategy being debated leaves the Fed plenty of flexibility, it might not be the clear and steady path markets expect based on past experience.
Officials are focusing on clarifying the strategy so markets don’t overreact about their next moves. For example, officials want to avoid creating expectations that their retreat will be a steady, uniform process like their approach from 2003 to 2006, when they raised short-term interest rates in a series of quarter-percentage-point increments over 17 straight policy meetings.
“I don’t want to go from wild turkey to cold turkey,” Richard Fisher, president of the Federal Reserve Bank of Dallas, said in an interview Friday. “I think we ought to dial it back.” Mr. Fisher is part of a contingent of Fed hawks who are wary of the central bank’s easy-money policies.
…
P.P.S. You totally missed the last bubble when it inflated right under your nose and imploded, and now you are totally missing the echo bubble, even as your very own QE3 MBS purchase policy blows it up a little bigger every day of the year.
Is he really missing it, or is it that he knows EXACTLY what is going on? Regardless of what kind of BS Bernanke is feeding the public, he is an economic terrorist interested in saving his beloved banker buddies, and nothing else. These people should be going to the gallows.
http://www.youtube.com/watch?v=uJg-ZmHV4E0
You took the thought right out of my skull. Thank you.
Can short sellers get hurt when stocks are dropping?
If so, how?
Short sellers getting hurt, but don’t call it a squeeze
May 10, 2013, 11:28 a.m. EDT
Stock shorts get hurt, but don’t call it a squeeze
By William L. Watts, MarketWatch
NEW YORK (MarketWatch) — It’s been an undeniably ugly week for short sellers, but don’t pin too much credit for the broad equity rally on a squeeze.
Global stock markets were advancing Friday, while U.S. stocks struggled to maintain gains as Federal Reserve Chairman Ben Bernanke said he was on the lookout for excessive risk taking.
Regardless of Friday’s wobbles, U.S. stock indexes are likely to end with another week of solid gains, and along the way the Dow Jones Industrial Average (DJIA -0.24%) and S&P 500 (SPX -0.11%) hit new highs—the 17th record close for the Dow this year.
…
Fellow HBB-ers: There will be a Tucson meetup this coming Tuesday evening. 6 p.m. at the Epic Cafe, southwest corner of University Boulevard and 4th Avenue. I’ll be chillin’ with the AZGolfer and hope to see you there too.
DJIA = 15K or bust!
The bond market bull is dead. Long live the bull!
Bill Gross says bond bull market is over, buys Treasurys
May 10, 2013, 11:50 AM
Pimco’s Bill Gross, manager of the Total Return Fund, said in a tweet Friday that the bull market in bonds is over. Gross, whose wisdom is highly watched in the bond market, had this eulogy for the 30-year bond market rally:
This is a stark way of putting it, but Gross has long said that future returns for bondholders will be lower. Here’s another tweet from last week, responding to Berkshire Hathaway chairman Warren Buffett’s bearish call on bonds:
PIMCO ✔ @PIMCO
Gross: Warren feels sorry 4 bondholders. PIMCO believes their future returns wl b low bc their yields are low but lots of holders need bonds
2:13 PM - 6 May 2013
Nonetheless, the Total Return Fund asset allocation Friday showed that he is indeed buying government bonds, putting his money where his mouth is after he said he had turned bullish on Treasurys maturing in less than 10 years.
…
The bond market bull is dead. Long live the bull!
The market in bull is continuing to do very well.
Sadly, this commentator is woefully wrong, because he doesn’t consider the potential for close substitutes to Bitcoin to effectively increase the future supply without bound.
Oops…
May 10, 2013, 6:00 a.m. EDT
Why Bitcoin will succeed
Commentary: The virtual currency is not doomed
By Barry Randall
It’s hard to know which there are more of these days: the number of Bitcoins worldwide or the number of pundits who believe the newly popular crypto-currency is a fad, doomed to failure, or both.
But rather than pile on, I have come up with several reasons why Bitcoin can succeed.
A natural consequence of a rise in value of something is the creation (or mere appearance) of more of that thing. Whether tulip bulbs, Impressionist paintings or dot-com stocks, a rise in the value of originals begets an increase in the supply of copies. These copies can be legitimate (e.g., follow-on stock offerings), or counterfeits (ultra-rare Ferraris cobbled together from parts of less-rare Ferraris).
But in the four years of Bitcoin’s existence, any increase in the number of available Bitcoins has been through the legitimate Bitcoin “mining” process, governed by the clever software that brought it into existence, and which permits mining of the crypto-currency.
As noted by Tech Crunch, “there have been attacks on independently-run Bitcoin wallets and exchanges, [but] the core 31,000 lines of Bitcoin [software] haven’t been compromised despite being available to the world’s best hackers and cryptographers for the last four years.”
So, despite huge profit motives (both legal and otherwise) the supply of Bitcoins is stable, growing in accordance with the algorithms that define the currency, and outside the control or influence of third parties.
…
Are we going to blow through the 2006 peak RE prices and what should the FED do different this time ?
last time I remember irrational exuberance statments and not much else. it kinda crashed on its own when the loans started going bad. All the leverage off the bad loans came crashing down very quickly.
will the same thing happen again ?
Why would it matter that prices went to infinity? Nobody is buying because everyone knows prices are massively inflated. It’s akin to asking $40,000 for your 1995 Chevy pickup. Nobody is going to buy it.
Housing demand has collapsed to 17 year lows. See for yourself.
http://picpaste.com/pics/60d7e9b64428349ffe2f8d1e5a4e9195.1368226577.png
And housing demand will continue to fall until these massively inflated bubble prices roll back to early 1990’s levels. And they will.
Buyer beware.
How are China’s “ghost cities” any different from US “shadow inventory”?
It seems to me that both are being used to prop up the respective country’s GDP more than to provide their younger citizens a place to establish their own households.