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| The current '''US property bubble'''is the ] ] in ] following the ] in the 1990s called, among other things, the ] bubble. | The current ''''US property bubble'''' is the ] ] in ] following the ] in the 1990s called, among other things, the ] bubble. | ||
| ==Evaluations== | ==Evaluations== | ||
Revision as of 17:07, 21 May 2005
The current 'US property bubble' is the United States economic bubble in real estate following the stock market bubble in the 1990s called, among other things, the dot-com bubble.
Evaluations
"Let's assume for a moment that enough people get fooled, and the refinancing boom gets extended for another year. Then what? The real problem hits. Because if you think Greenspan's being cagey on refinancing, the truth he's really avoiding talking about is that we're in the midst of a huge housing bubble, on a scale only seen once before since the Depression. Worse, the inflated housing market is now in an historically unique position, as the motor of the rest of the economy. Within the next year or two, that bubble is likely to burst, and when it does, it very well may take the American economy down with it." Washington Monthly 2004 April
"There is a sharp debate over whether there is a bubble in the U.S. housing market generally or in certain localities, or whether there is a bubble at all. But the past two days have brought fresh warnings that home prices are unsustainable." Forbes 2005 March
Evidence
"In the last eight years the country has experienced an unprecedented run-up in housing prices, as home prices nationwide have risen by 35 percent (adjusted for inflation)."
Homeowners' equity is 55% of housing value, down from 72% in 1986, according to Federal Reserve data.
The ratio of house prices to median family income is 19% above the 1975-2000 average, according to data from the Office of Federal Housing Enterprise Oversight and the Census Bureau.
"There has never been a run up in home prices like this," said Dean Baker, co-director of the Center for Economic and Policy Research.
In a report called "The U.S. Housing Bubble -- The case for a home-brewed hangover", HSBC Securities U.S. economist Ian Morris says home prices are out of whack when compared to rental prices, income and other key indicators.
"The overheating is greatest in markets such as Los Angeles, San Francisco, San Diego, Washington, New York, and Boston. The takeoff in coastal real estate started around 2000 -- suggesting that the speculative fever of the late 1990s did not die but instead jumped from stocks to real estate. From 2000 through the first quarter of 2004, single-family home prices are up at an annual rate of 8.2% in the Pacific region, 8% in New England, and 7% in the Middle Atlantic region, according to the Office of Federal Housing Enterprise Oversight. Prices rose 18% in Los Angeles, 14% in Miami, and 13% in Washington in the year through the first quarter, says the agency. ... Today's housing prices are predicated on an impossible combination: the strong growth in income and asset values of a strong economy, plus the ultra-low rates of a weak economy. Either the economy's long-term prospects will get worse or rates will rise. In either scenario, housing will weaken."