Ride the Real Estate Roller Coaster
by David Atkins ("thereisnospoon")
Remember all the pundits who said back in 2006 that we were in a different kind of economy, one where housing prices might continue to rise indefinitely, or at least never fall? Many of you will already have seen this, but below is a graphical depiction of the Case-Shiller index of home prices from 1890-2006, plotted as a rollercoaster:
See that death drop at the end? The one that never comes? Someone will have to explain why anyone in public policy listens to the morons who insisted that the inevitable would never happen. Back in 2005, I told anyone who would listen that real estate was coming down, but most people around me trusted the financial experts who said it wasn't. And yet the same fools who inflated the bubble and then maintained the bubble didn't exist, still run our economic policy no matter whether Democrats or Republicans get elected.
A year ago, someone uploaded another real estate rollercoaster video, but this time updated to mid-2010:
You'll notice how much farther it still has to come down to reach pre-bubble levels. That decline has happened somewhat in the year since the video was made, but the fact is that housing is still overvalued.
Trying to force this rollercoaster to move higher again in this context is a fool's errand, and bad public policy anyway. And yet that's exactly what the Administration is trying to do by giving the banks indemnification for mortgage underwriting fraud. Crazy.
These days it's not the real estate rollercoaster that scares me anymore. It's the public policy insanity coaster. Let me know when it stops and we can get off, because I'm going to be sick.
.