Replies to post #415 on Real Estate Bubble (RUBBLE)

[Wachovia_Man]

This can only come from someone who has very little experience in Economics.

I sold my home for one reason: George W. Bush. He and his protégé at the Federal Reserve have submerged the country into a morass of “unsustainable” debt, disrupted the nation’s economic equilibrium and thrust us towards fiscal disaster. They’ve also generated a humongous housing bubble through their irresponsible and self-serving manipulation of interest rates.

[Rawnoc]

Fascinating stuff. I with the Economist on a lot concerning the housing bubble only that it may still have more to bubble first. It may now be like the tech bubble only it's not March or February 2000 yet but maybe late 1999.

Possibly discussed here before, but a few additional factors I don't read often are the mass quantity of retiring baby boomers depending on their homes to supplement their retirements. A lot of them are delaying their home sales than they otherwise would waiting for higher prices. Another is lack of being able to refi to pay existing debt. It's incredible how many Americans have been relying on this magic increased credit to stay afloat, much like your credit card company continuing to increase your limit and you use this limit to in turn pay your monthly payment.

Localized bubbles - some of that makes a good argument except that like so many goods when there are similar substitutes available, a price crash in one area virtually always affects others. You can't have a bubble burst in Los Angeles and expect prices Miami, for example, to stay flat as there is always some price competition between the two.