Sunday, May 24, 2015

We are now once again at the peak of the new housing bubble

The bursting of the Housing Bubble in 2007 that signaled the lead-in to the overall stock market collapse and credit crisis was quantified by two key technical points.  First, home prices were far above their actual values, with bidding wars causing prices to escalate for even the most run down shack.  And second, a large portion of home buyers near the end were sub-prime mortgage borrowers who couldn’t afford the monthly payments once the economy collapsed, and job losses escalated during the recession.
So using these two parameters, it is fair to say that the Fed’s mission of re-inflating the housing market has been a success, and any artificially stimulated bubble has only one sure outcome.
To burst.
 

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