Yes Virginia, There Is A Housing Bubble
It’s been over a week since my latest Cassandra-like post on the housing bubble, so it was quite fortuitous when I ran across this post on Always-On.
In it, Eric Janszen paints a gloomy picture of just how out of control today’s real estate bubble is.
A few key tidbits:
“Since the beginning of the economic recovery in November 2001, employment in housing and housing-related industries has accounted for 43% of the increase in private-sector payrolls, according to Asha Bangalore, an economist for Northern Trust Corp”
“What is not debatable is whether the rate of home equity extraction will revert to the mean rate of about zero, from the current rate of more than $250 billion annually. It will.”
What’s most disturbing is his chart of home equity extraction, obtained from Northern Trust. It shows that today’s bubble is about 10 times bigger than the last bubble in the mid-1980s.