Another Housing Bubble is Starting

[Person Man]

As glad as I am about seeing an economic recovery that is finally starting to gain steam, I do not want to see it based on housing, credit, and consumption like the last time.  We need an economic recovery based more on manufacturing exports, savings, and investment.    

and to do that, we need growth based on innovation, not speculation. This is the basic policy differences between the parties when it comes to growth.

[Person Man]

Zillow does seem a bit off. Some places they value like half of what the next house just like it just sold for and in other circumstances, its like double. Basing values on statistical sources where there are few degrees of freedom by definition will give you double-digit errors.

[Person Man]

DeadFlagBlues' professor is probably thinking about YoY changes. The last month's MoM change on Zillow is the same as the MoM change from the height as the housing boom, however that is just for one month. To have a real housing bubble we would have to see it consistently at this level month after month. At the height of the bubble a 1% MoM gain meant 12% annual gains for the national market. So at 3-5% annual gains for 2012, and even with higher 7-9% annual gain projections for 2013, we are significantly short of that.

Hopefully, this can be sustained like the gradual growth that we saw in the 90s and early 2000s. Maybe home prices will be back to where they were in 2020. Some realtor were saying that at the beginning of....this.

Everything I've read about the housing bubble tells me it wasn't having the bubble itself that was the problem, but the fact that it was overinflated by bad bond ratings and a sneaky investment scheme that encourage poor loans.  Is that wrong?  Was that not regulated out?  Is it not possible to have a healthy booming housing market?

Yeah sure, provided the demand is there to create it. The question is, does America really have enough demand to raise housing prices significantly?

Well, if demand and prices are growing despite Dodd-Franks regulations against the mortgage market being in place, then... yes?

The problem is that more and more wealth is concentrated in fewer and fewer hands. It was true before the Great Recession and it's even more true now.

A handful of rich people plus some credit extended to some of the vast number of poor and near-poor people does not make a healthy economy.

Define "poor" and "near-poor"? Are you talking about the 49% of people at or below 200% of the poverty line?

[Person Man]

Maybe home prices will be back to where they were in 2020. Some realtor were saying that at the beginning of....this.

Doesn't matter.  There are plenty of places where home prices remained very sane throughout this whole fiasco.  Look at Texas.  People were acting like Perry was some kind of economic genius but the fact of the matter is you didn't see widespread housing lunacy like you did in Vegas and Miami.

The numbers that are being tossed around are aggregate numbers.  There are areas that will not see the prices we saw at the peak for decades.  In Ireland the government is actually actively involved in tearing down perfectly good houses because they will most likely never be occupied any time soon.  Even if aggregate numbers improve that doesn't tell you about local pain.

It appears the only reason that someone moves to Texas is because they have to because they have  no other place to go with anything else to do. Maybe that will allow  Texas to snowball into a desirable place one day, but apparently Texas being anything more than it is now is still decades away (more or less around the time that our useful lives will end), if that will ever happen at all. But hell, if that's the only place where there's something for you to do, I would be grateful.