Highly recommended read from the Organization for Economic Cooperation and Development (OECD) putting housing bubble in current and historical context. Print this out and read the whole PDF report - including the charts.
Highlights:
"The current house price boom however is strikingly out of step with the business cycle"
"Of the 37 large upturn phases between 1970 and the mid 1990's, 24 ended in downturns in which anywhere from one-third to well over 100% of the previous real-term gains were wiped out. This in turn had negative implications for activity, particularly consumption"
December 05, 2005
OECD study - Housing prices have become unhinged from business cycle, and downturns follow upturns historically
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2 comments:
Two big problems with real estate:
cost to own vs. cost to rent ratio
home price to income ratio
Both of these ratios are key indicators for real estate values, and both are at historical highs.
I have no doubt that this country is about to experience its first drop in nationwide home values. I wonder how long it will take for congress to change the bankruptcy law again.
people who get burned by this bubble will just have themselves to blame (although they'll be blaming everyone but themselves)
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