Walking Down the Middle of the Road...
an ideablog in search of new ideas, different perspectives and vibrant debate from a centrist point-of-view
posted by Alan Stewart Carl @ 10:10 AM
Well, he presents a very existential argument that, frankly, is hard to follow and doesn't make much sense. He seems to be saying that real estate assets are fundamentally different from other assets, and therefore a bubble doesn't exist.One would take from that viewpoint that a bubble can't exist in the housing market. Tell that to Japan, a country still trying to recover from the housing bust of the early 1990's.BTW - did you notice that the writer's name is basically 'Lion Tiger?'
the housing bubble probably does exist in a few markets, but not overall. I have always had problems with the models used, because they rely too heavily on past prices. They do not adjust for the economic growth in a region. They seem to ignore trends. Like calling Las Vegas overheated. not recognizing the growth of the city. past numbers are not relevant in situatiosn where a city doubles in size in elss than ten years.
Lionel Tiger sounds like some British adult movie star.I do a lot of work in real estate in Washington, DC where the prices have gone up by over 100% in 5 years, so the housing bubble is big talk up here. I don't know if Tiger is correct, but I do think it's important to remember that real estate is a different kind of investment in that, for most people, it's actually a place to live first and an investment second. My feeling is the buble won't "burst" so much as prices will dip slightly and then rise at a far slower rate.
There's a difference between commercial real estate and housing. As I recall, a lot of the Japanese problem revolved around commercial speculation.He does say that some of those who speculate are going to get burned, but those who are buying a house to live in should be fine.
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