--- In FairfieldLife@yahoogroups.com, akasha_108 <[EMAIL PROTECTED]> 
wrote:
>
> Per recent housing price discussion, a new study highlights three 
key
> factors that distinguish the current pruce surge and the 
traditional
> housing price cycle -- indicating a potential bubble.
> 
> ---
> Study cites recent trends that signal housing bubble
> 
> Washington, DC - Recent trends in the housing market suggest a
> dangerous housing bubble, rather than a run-up caused by 
fundamental
> factors such as higher incomes and population growth, according to 
a
> new study by the Center for Economic and Policy Research (CEPR).
> 
> The report, "Will a Bursting Bubble Trouble Bernanke? The Evidence 
for
> a Housing Bubble," cites three trends in the housing market that
> suggest an unsustainable increase in house prices: 1) A sharp
> divergence between house sale prices and rents; >>


No, in the past rents were too close to the cost of buying a house, 
now it is  more expensive to buy a house than to rent, and this is a 
normal market correction. Normal.


2) An extraordinary
> jump in the rate of housing construction; >>>

Only in parts of the country, where there has been an increase in 
jobs. Normal.


<<  3) A sharp decline in
> the savings rate, driven by a housing wealth effect.>>>

This means people have less savings than they had when they were 
renting and were pouring $10 to 20,000 a year down the drain in 
rent. Now they are buying and therefore have less savings but are 
not wasting money on rent.

OffWorld







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