Is a Real Estate Downturn Coming? Message Board

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Pastimes : Is a Real Estate Downturn Coming?

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To: TimF who wrote (89)	2/13/2008 7:45:09 PM
From: Jack Be Quick	Read Replies (1) of 91

The argument seems to be: If there was a bubble, and the bubble has burst, then why aren't we back to historic norms? Since we are not back at historic norms, there must not have been a bubble, only a shift to a historically higher level. The simple answer to that is that the bubble has nowhere near finished bursting yet, and the yardsticks by which the drop in value are measured haven't yet caught up with the extent of the decline in value. Until the house actually sells, the decline in value will not be recognized. My guess is that sales are running a little bit slow right now (but I am not motivated enough to look it up and document it). Beyond that, I'm also thinking that the popular and fairly scary looking chart that he uses to visualize the housing bubble, impressive as it is, still understates the extent of the "bubbleness" by not including the billions of dollars of housing "value" cooked into homeowner lines of credit secured by housing values that have now gone poof, along with those loans, i.e. the cash taken out using the housing ATM. Have to say, I'm impressed with your attention span. Last previous post was sometime in 2002? Way to stay with a question! :-)

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