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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: mishedlo who wrote (36738)8/2/2005 3:40:53 PM
From: Wyätt GwyönRead Replies (1) of 306849
 
btw, a couple-three comments:

1) i think the housing affordability numbers are irrelevant, since they are based on conventional mortgages which nobody uses anymore in bubblezones. if only 11% of people could compete for a median house, i think prices would have been plunging much more quickly. in fact, due to lax credit, we have artificially (and of course, only temporarily) severed the link between income growth (or even income existence) and price appreciation. all these means the percentage of people who can compete for houses (as opposed to "afford" them in the long run) is much higher than the quoted 11% or whatever.

2) Barfsky mentions employment growth as a critical factor underpinning price appreciation. but in bubble markets like LA, absolute employment is actually down over a period where prices have doubled. not to mention what we all know: 43% of payroll growth in our pathetic recovery has been RE-related, and thus contains many jobs which will go to money heaven.

3) in general his ludicrous arguments are just the widely cited talking points which are believed hook, line and sinker by many in the bubble zones. remember, most people have zero financial sophistication, so they are willing to believe any sort of crap as long as the music keeps going.
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