bubble talkWe keep seeing more bubble-bursting articles being published – and the perception may be more important than the reality if consumers are addicted to soundbites and read no further.

This article promises proof that the bubble is about to burst:


But there is no proof in the article, just more speculation from an ivory-tower type who rattles off the same tired speculations, including lagging incomes, unaffordability, FHA, blah, blah, blah.

Regurgitating the same old beliefs ignores the reality – the market is driven by the affluent. Because listing agents give preference to cash buyers, the rich folks have a distinct advantage, and they have been gobbling up investment properties and most of the quality homes in which to live.

I am really sick of this old adage – from the article:

Without housing affordability there cannot be a rise in first-time buyer participation.

Without the entrance of first-time buyers, those wishing (or hoping) to move up to a larger home or relocate into other neighborhoods will not be able to so, at least not readily. This can produce a cascade effect on housing prices, starting to drive them downward to reflect a decrease in demand.

There are many first-timers buying homes – they pay cash, or have a big down payment so they can compete.  Besides, first-timers aren’t the only buyers interested in the cheaper stock – BlackRock and other investors are happy to buy up all of the cheaper homes so those sellers can move up.

Here’s another from the same article:

If housing prices begin to fall, wouldn’t one expect the investors to at least consider dumping homes onto the market to minimize potential losses? If they did so, the aforementioned cascade-effect would drive prices down even further.

This is the new normal, where we have learned that unless sellers can get top dollar, they aren’t interested in selling.  Investors have already gained 10% to 30% appreciation, if they lost some or all of that, they wouldn’t dump at any cost – they’d wait until next time.

The new lesson has been learned right before our eyes – don’t dump properties; instead let’s resort to any other means necessary, including bending the foreclosure and accounting rules.  Ben Bernanke said as much here:


The general public needs to become wise to these gyrations.  The fix is in, and the new normal is unlike anything we have ever seen or imagined.  Wall Street will conspire with BigGov to ensure that there is a floor – and you might as well get your share while you can.

The media insists on scary headlines, rather than exploring the truth – and they wouldn’t mind if we did pop another bubble, whether we need to or not.

Don’t believe anything you read, and only half of what you see!

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