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‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

fullstackeconomics.com

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Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#41

Post by Nursie »

Andaith wrote: post #9
sien wrote: post #3

Paul Krugman described the effect memorably in 2005. https://www.nytimes.com/2005/08/08/opinion/that-hissing-soun... "Then there are the numbers. Many bubble deniers point to average prices for the country as a whole, which look worrisome but not totally crazy. When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone. In Flatland, which occupies the middle of the count…

Which is crazy, because you would think that Australia was mostly Flatland! It's the size of the continental US, with a population lower than Texas. Everyone here lives in the capital cities, and last I looked there were almost no tech jobs at all further up the coast between Sydney and Brisbane. I wonder if pandemic working from home is going to change this, some of our devs have already moved up the coast...

There used to be an IBM office in Gold Coast, many moons ago. No idea if it's still there.

That stretch of coast has been seeing massive house price inflation recently as well, IIRC.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#42

Post by johnny_reilly »

sien wrote: post #3

Paul Krugman described the effect memorably in 2005. https://www.nytimes.com/2005/08/08/opinion/that-hissing-soun... "Then there are the numbers. Many bubble deniers point to average prices for the country as a whole, which look worrisome but not totally crazy. When it comes to housing, however, the United States is really two countries, Flatland and the Zoned Zone. In Flatland, which occupies the middle of the count…

> Just pity the countries that effectively don't have a Flatland, like Australia, the UK and NZ.

Ha! I see your "UK does not have flatlands" and I raise you Norfolk. V flat indeed

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#43

Post by MiddleEndian »

nitsuaeekcm wrote: post #10

Something funny about bubbles. I’ve heard it said that housing prices in 2005 were outrageous, so much that they could only possibly be justified if the population somehow banded together to stop most new housing from being built. Likewise I’ve also heard something about the dotcom bubble- that the valuations of tech firms in 2001 were outrageous. That the multiples given could only ever be sustained if American cons…

>so much that they could only possibly be justified if the population somehow banded together to stop most new housing from being built.

This seems to have actually happened. Consider this simple recent example in Boston:

https://www.universalhub.com/2022/board-rejects-apartment-bu...

People protested to stop twenty-eight units from being built next to a train station on a commercial lot. The zoning board had a 3-2 vote, with three in favor of the development against two who opposed it. However, the law is such that a 3-2 vote is not enough to approve it, so the owner was prevented from building more housing.

Multiple levels of government prevent housing from being created and this issue clearly cascades throughout the entire country.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#44

Post by kccqzy »

vl wrote: post #19
eurasiantiger wrote: post #15

Earlier quoted context omitted.

Money laundering explains Vegas and New York.

But how exactly can you launder money through buying a house? If you buy, essentially you declare you have the money, thus question can be asked where you got it from.

With a mortgage certainly the bank will ask where your down payment comes from. But do all-cash buyers really get asked where the money comes from?

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#45

Post by prox »

throwawaycities wrote: post #38

There is no doubt that the entire housing market was exploited to float the US economy and covered up a recession dating from 2000-2001 until the housing market could no longer be sustained resulting in a complete collapse of the financial markets and banking. The housing market didn’t “snap back” rather two unprecedented tax payer stimulus packages totaling just shy of $2T were given to the banks to finance millions…

One my pet peeves is that better ventilation legislation has been blocked and for that 7T you could probably upgrade every ventilation system in existence. According to a NYT article the average vent system is 4 on a scale to ten. In a pandemic you want something like an 8.

This would seriously hamper COVID / airborne viruses.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#46

Post by jb827 »

vl wrote: post #19
eurasiantiger wrote: post #15

Earlier quoted context omitted.

Money laundering explains Vegas and New York.

But how exactly can you launder money through buying a house? If you buy, essentially you declare you have the money, thus question can be asked where you got it from.

I reckon flipping houses and renovating is one way - Buy an older house. Spend dodgy money into some serious renovations. Sell house for + . Money washed.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#47

Post by alasdair_ »

ta2234234242 wrote: post #22
greatpostman wrote: post #16

Earlier quoted context omitted.

Paul krugman has been wrong on almost everything

When you win a nobel prize in economics, I will listen to you more.

> When you win a nobel prize in economics, I will listen to you more.

Henry Kissinger won the Nobel peace prize.

Sometimes they get it wrong.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#48

Post by mejutoco »

vl wrote: post #19
eurasiantiger wrote: post #15

Earlier quoted context omitted.

Money laundering explains Vegas and New York.

But how exactly can you launder money through buying a house? If you buy, essentially you declare you have the money, thus question can be asked where you got it from.

I imagine you can pay some extra in cash to get the property while the official price is lower, but still realistic. You are then getting an asset that you would otherwise not get, using cash in part.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#49

Post by t_mann »

DoingIsLearning wrote: post #40
t_mann wrote: post #21

Interesting view and great data crunching. But I am amazed how one can write a long article purportedly about the causes of the 07/08 crisis without ever mentioning credit quality. By my impression, the prevailing view is that the crisis was caused by poor credit quality of some home buyers (I remember the term NINJA borrowers - no income, no job or assets). This was masked away in complex financial products (CDOs,..…

> caused by poor credit quality of some home buyers Small detail but the wording here implies a causation, that it was the home buyers who were the makers of the crisis. Whereas we now have ample evidence that it was the real estate companies and mortgage lenders who when faced with free money, became predatorial of people who had no capacity or understanding of the financials of becoming a home owner. We can always…

Yes, you're right, we should be careful with the wording here. I would also blame the system, where Physics PhDs were paid to put enough math in the product presentations to convince traders that the AAA ratings (for products with substantially higher returns than usual for such ratings) were justified. Of course, the resulting transactions earned all sides huge individual cash bonuses (large enough to allow them to achieve financial independence if they could keep the scheme rolling for just a few years, regardless of whether their employers would go bust), which may arguably have contributed to their willingness to turn a blind eye to common sense.

Re: ‘Housing in ‘07 wasn’t a bubble” is a true statement that almost no one believes

#50

Post by alasdair_ »

mannerheim wrote: post #36
ta2234234242 wrote: post #22

Earlier quoted context omitted.

When you win a nobel prize in economics, I will listen to you more.

There is no such prize. There's a Sveriges Riksbank Prize in Memory of Alfred Nobel.

To be fair, it's still a yearly prize, for economics, awarded by the same Nobel Foundation that awards the other prizes, under the same rules as the other prizes. The laureates are announced at the same time as the other laureates, the awards are presented in the same manner as the others and everyone shows up to the same Nobel Prize Awards Ceremony.

And if we really want to go full pedant, the award isn't called anything in English at all, the real name is the "Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne"

But pedantry is silly, right?

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