PeakTrader.com

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Chart:

http://1.bp.blogspot.com/_otfwl2zc6Qc/TI7d5ESo74I/AAAAAAAAOY8/O1wb04n2z9Y/s1600/homes.jpg

PeakTrader said...

One theory is there were too few houses before 1995, because of the savings & loan crisis, recession, and slow recovery.

Demand for houses increased during the 1995-00 bubble, because the U.S. reached beyond full employment, real wages rose, and actual output increased beyond potential output.

Speculation took over when housing prices kept rising. People wanted to buy houses before they rose even higher, more people were flipping houses, and there was more investing in mortgage backed securities.

Something similar to Tulipmania emerged after the mild recession in 2001 and before the second bubble burst in 2007. Homeowners and investors made lots of money.

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juandos said...

PT says: "One theory is there were too few houses before 1995..."...

Hey PT, who would've said something like that?

Was that a government source or someone from the lending industry?

Thanks...

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PeakTrader said...

Juandos, my theory is based on business cycles, which sometimes cause asset bubbles (e.g. Nasdaq, housing, gold, etc.).

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PeakTrader said...

The defenders of big government are better defending big government than the defenders of the free market are defending the free market.

That's why we have a Marxist President, a Pelosi House, and a 60 seat Democrat Senate.

Too many Americans have no idea that $2 of private benefits is often given up for $1 of public (or state) benefits. Even intelligent Americans can be ignorant.

There's been too much focus on the benefits of big government and too little focus on the costs. Afterall, you cannot miss what you never had.

The Tea (Taxed Enough Already) Party senses government doesn't serve the people or even serve the country. Government serves government. When the government gains, the people, and the country, lose even more.

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PeakTrader said...

The Administration and Congress kept placing roadblocks to economic growth. So, of course, a V-shaped recovery couldn't be achieved. The Bureau of Consumer Financial Protection is another example.

Reducing uncertainty will help the economy. Bank credit remains low, because banks are less willing to lend and borrowers are less creditworthy.