Friday, December 4, 2015

Housing Bubble 2.0 vis-a vis Housing Bubble 1

This Charles Hugh Smith fellow seems to have a pretty good eye on the strikingly similar trajectories of the 2 Housing Bubbles we've had foisted upon us this past decade plus.

I present his article closing statement without comment...

Now the gap between real house prices and real earnings is even wider than it was in Housing Bubble 1. History (and common sense) suggest that housing prices will once again fall sharply until the black line of house prices is well below the red line of real earnings.
To expect anything different is unrealistic and highly dangerous to one's financial well-being.


  1. It looks also like the time since that last "cross" is about up now. Looks like it took about 3 years from the 2004 cross to start the drop in home prices, and it's been 2+ years since the cross in 2013.

    1. Everything seems to be converging around the election year, just as it did in 2008. Did you catch the article on ZH about the new Fannie Mae product to support multi-generationl buyers?

      I think it's a very telling sign. They know that the properties that will be hardest hit in the next correction are the 2500-3500 sqft McMansions of which so many have been built during Bubble 1-2. The only way they can get working class people to qualify without going NINJA (which Dodd Frank prohibits) is by making their incomes "look" better. This new product is likely intended to put a floor under prices once the downward momentum picks up.

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  3. It will be competing political agendas. The winner will decide whether the crash occurs before or after the election. It is pretty interesting that the Fed just withdrew enough liquidity to negate almost of all the QE since mid 2009.

  4. This guy does a great job explaining the dynamics of this bubble.

    It's worse than last time.

  5. It will be competing political agendas. The winner will decide whether the crash occurs before or after the election.
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  6. Zero posts in 4 months. Guess that Housing Bubble has reached Armageddon proportions eh?

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