I liked this guy’s analysis of the housing bubble. Some key points he makes:
The past century hasn’t seen a run-up in the cost of housing remotely comparable to the past six years. The FDIC has identified more than 50 markets where home prices were up by an inflation-adjusted 30 percent or more per year in that period, through 2004.
In California, median existing home prices have pushed past $500,000, or double the $262,000 median price of four years ago. Many markets in Florida and Massachusetts have also doubled in that period.
Consumers are leveraging their unrealized home-value increases, or “gains on paper,” with more borrowing. It doesn’t take a Greenspan to predict what would happen should some markets go south quickly.
Many experts feel recent price declines in Australia and England portend the same for the United States.