Where Housing is Right Now
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Those of you who believe it’s a bubble will want to clip and save this item, which comes courtesy of the Irving Housing Blog. As you can see, it’s a map of the ‘Psychology of a Bubble’:
‘The above graph is an excellent depiction of the psychological stages of a market bubble. It is fairly easy to put time frames to each of these stages as displayed by our local housing market:
• Take off: 1998-1999
• First Sell Off: 2000
• Media Attention: 2001-2002
• Enthusiasm: 2003
• Greed: 2004-2005
• Delusion: 2006
• Denial: 2007
• Fear: 2008
• Capitulation: 2009-2010
• Despair: 2011-2013
• Return to the Mean: 2014
Obviously, the past is easier to document than the future, so we may reach future stages sooner or later than shown above, but we will reach them.’
Where are we now? ‘Right now, we are in the denial stage. Prices have not dropped enough to cause real fear. Denial is apparent in polls like this one ... where 85% believe their home will rise in value during the next five years, and 63% believe a house is a good investment. That is serious denial.’
What do we think? L.A. Land is in the Greenspan camp, which holds -- in a rather wimpy fashion -- that bubbles reveal themselves only by popping. That is, until it pops, you don’t know for sure if it’s a bubble.
And -- though it is true we have been accused many times of being a bad listener -- we haven’t heard the distinct sound of a pop in L.A.
Your thoughts? Comments? Insights?
Thanks for the link: Patrick.net
Graphic: Hofstra economist Jean-Paul Rodrigue via Irvine Housing Blog