Wednesday, November 09, 2005

No Duh!

These are the "no duh" days of the bubble burst.

Case in point — a news analysis by Peter Coy that was posted today at Business Week. Many of the same themes we've been stressing here at The Boy in the Big Housing Bubble the past few months were includied in the lengthy piece — overvalued homes, risky exotic loans, the wisdom of renting instead of buying right now, as well as the lack of saving for a rainy day by Americans who have seemed determined to suck the last dollar of equity out of their homes to finance a deck, or augment a body part. Of particular note was this tidbit:
The formation of a housing bubble is clear in the latest government data on gross domestic product. Residential investment -- i.e., homebuilding and remodeling -- is running way above its historical average share of economic output, according to the latest numbers.

Home prices, too, have clearly gotten out of whack. They've risen far faster than family incomes. People have been able to buy because mortgage rates have been low. But now rates are rising again. And with the Federal Reserve determined to squelch inflation, they're likely to keep going up well into 2006.
Stop the presses. Someone else gets it.

— The Boy in the Big Housing Bubble