patrick.net

Expectations of continued inflation encourage bubble mentality, as overpaying in one year will be bailed out as long as inflation continues to roar.

This produces a feedback cycle, as the increasing real estate valuations shower extra asset value and thus borrowing power on everyone.

The US's bubble was particularly egregious due to the outright suicide lending -- negative amortization, qualifying borrowers on teaser rates, liar loans, etc -- that boosted the market 2004-2005 once the boom (courtesy Greenspan) of 2002-2003 turned into a bubble.

The ending squiggle in the above US graph is curious though, there is no prior 'plateau' like the Japan case of 1983-85; once prices topped out in the US, hello recession.

But I don't think things now are comparable to 1980, 1990, or 2007. Volcker declared war on borrowers in 1980:

http://research.stlouisfed.org/fred2/graph/?g=1202

And Greenspan tapped the brakes in '89, eventually giving us the 1991 recession.

Greenspan was on the brakes again leading up to the 2000 election, but didn't produce a recession until 2001.

Strangely, the housing market didn't fall at all in 2001-2002 according to these numbers.

Demographically, we've got the millennials age 15-33 now, so still need much more supply increase -- similar to what we needed in the 70s and 80s to house the baby boom -- to be able to house everyone.

we're not going to make it

It's a coming, guaranteed.

Call it Crazy says

You're just figuring that out NOW???

2-1 that you don't even know what Bill was saying with that sentence.

tatupu70 says

2-1 that you don't even know what Bill was saying with that sentence.

Projecting?