patrick.net

http://ochousingnews.com/news/fiscal-cliff-deal-favors-reflation-of-housing-bubble?source=Patrick.net

One of the many misperceptions that emerged from the housing bubble and its associated collapse is the idea that house prices during the bubble were normal and sustainable and that the lower values today represent a depressed value from which the housing market must “recover.” In the case of asset bubbles, prices become greatly elevated from fundamental values, and the price collapse merely restores prices to their fundamental values. In reality, the housing market “recovered” during 2007 and 2008 when prices crashed back down to price levels sustainable by local incomes. Since a true “recovery” with pre-bubble prices also means...

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