Tuesday, May 30, 2006

The Housing Bubble Video

The Housing Bubble Video
This is a fascinating video of a presentation by Christopher Thornburg, a senior economist at UCLA's Anderson School, discussing why we are in a housing bubble.

Not only is Thornburg rigorous, well-armed with long-term stats, but he's darn entertaining as well. Of course, at the end of the video, you probably won't be laughing.


Justin K said...

Thornburg is an excellent speaker.. very entertaining, although I was a little let down by his conclusion.

I think for most people who don't buy a home, they don't buy it because they're afraid it will go down. Because they'll feel like a moron when talking to friends about how much they bought the house for.

Now if one feels certain the prices won't go down, I think a majority of people with families would not mind buying a house even though they know it won't be going up for a while... just for the fact that they now have a "home".

So yeah, I'm still hoping to see a bloodbath the likes of Japan, just because it would make life a little more interesting :)

Chris said...

A bloodbath would be entertaining, but would probably have some serious consequences for the economy that would make life unpleasant for many, so I'm willing to live with flat home prices!

seamus said...


I'd contend that most people who aren't buying homes right now are staying out because it's so much cheaper and lower risk to rent. In San Francisco, for $2,000/month you can rent a house that would cost you 2.5-3.0 times that much to own (including property taxes, insurance, and upkeep), with the very serious risk that your payments won't be building any equity at all.

This disequilibrium is what's keeping most of my fellow renters away from buying a home.

Justin K said...


I completely understand where you're coming from... a very logical "lets compare the costs" approach. Its just that the vast majority of the people I know say they're renting because they feel the house prices will go down... not because they're actually calculating the "best vehicle" for their money.

And most of my friends who have bought say they buy because "real estate never goes down".

Both sides don't really tell me the ROI story but repeat the same cliches.

Its either "real estate is a bubble and house prices will come down... I'll buy when it comes down"... OR... "real estate prices will only go up... plus I get the tax breaks"