I found this chart at both the Northern Virginia Real Estate Guide and at HousingPanic, but felt that it was important enough that we also show it to you.
Click on the image to see it LARGER:
There are a few parts of the chart I find interesting. First, the run up in prices in the current decade is TWICE as large as the previous largest spike during the post WWII housing boom. That alone tells you how out of whack this build up is.
In addition, “new data also suggests that the market might be at the end of a cycle”, claims Robert J. Shiller, the economist who published the chart in his book, Irrational Exuberance.
The two lesser housing booms, which occurred during the 70’s and 80’s, are dwarfed by this “brobdingnagian housing bubble.” It seems like a really long way back down towards status quo pricing. I don’t want to sound like chicken little here, but I see no way that this market can sustain itself. I know too many people who are in homes they can’t afford because they fell into the frenzy of the market. I just worry that the collapse of housing can take the rest of the economy with it.
This is a very sobering economic picture that we face, and I hope that the we don’t end up like Japan of the late 80’s/early 90’s. The scary part is that their economy prior to the crash looks like ours does now. There was a period of high land and stock prices. . . the markets collapsed and the banks became riddled with bad debts. Many of their manufacturers moved overseas and unemployment jumped.
The thing that scares me most is that on top of the bubble, we’re faced with an $8.5 Trillion National Debt (was only $3.6 Trillion in 1999), we’re pouring somewhere between $5 billion and $10 billion a month into Iraq, and no one seems to know what to do with any of these problems . . . and then there is Social Security.
Try and ponder all of that for a while . . . I’m getting some Advil!
Welcome to Our Blog!
Welcome to the Real Estate Dispatch from BiggerPockets.com. Our blog brings together experts in various fields of real estate with the goal of keeping our readers informed and up to speed. Whether you're a real estate professional (lender, Realtor, banker, etc), investor (landlord, flipper, wholesaler, etc.), or simply a consumer, renter or homeowner interested in the world of real estate, this blog is the place for you to get involved!
You can subscribe to our RSS feed, get blog updates by email, join our free mailing list, or best of all, join our social network along with 35,000 others interested in real estate education, dealmaking, networking, and marketing.
Article Author:
Joshua DorkinJoshua has written 539 articles for us.
Visit Joshua's Website: http://www.biggerpockets.com/
BiggerPockets.com was founded by Joshua Reed Dorkin in August 2004. An entrepreneur, web designer, real estate investor, and one-time realtor, Joshua was not satisfied by the online offerings of other real estate sites out there, and decided to build one himself. Mr. Dorkin's vision for BiggerPockets has helped to propel it into becoming one of the top real estate destinations online. His vision for the site and its future has brought national press attention to both Mr. Dorkin and to BiggerPockets.
Joshua Dorkin
Charles Feldman
Ted Karsch.
{ 6 trackbacks }
{ 0 comments… add one now }