Re: Interest rates and housing

[AdmrlLocke]

In a message dated 8/18/05 11:40:59 AM, [EMAIL PROTECTED] writes:

> If government has caused a real estate price
> bubble by artificially
> lowering interest rates, how can it have an 18-year
> cycle,
> David

Because real estate construction takes years, and
recovery from a downturn takes years.
An exception is an inflationary boom that is not a
real  economic recovery, such as the stagflation of
the 1970s. That's why there was a real estate peak in
1979.

>  Why does the money go
> into residential real estate and not into stocks or
> automobiles or other assets?

The money goes into all real estate, not just
residential.  Of course it also goes into stocks, as
with the tech boom of the 1990s, followed by the
downturn of 2001, which was not caused by real estate.
  But the real-estate boom prevented the 2001
recession from becoming major.  The big depressions
have all followed real estate booms.

Fred

I don't follow you. Are you saying that there's a real cycle of real estate that takes 18 years from (from peak to peak or from peak to trough?)?  That seems different from your initial contention that the current bubble has been caused by monetary growth.  Are you saying both things? If so, then do you predict a collapse of real estate prices based on monetary or real factors, or both?

David