This chart calls out the explicit relationship between low interest rates and housing prices. My favorite part of the chart is the box that calls out "Government actions that increase expectations of higher prices." Ahh... so you are saying that it is the role of the government not only to keep the cost of capital down, but to expressly manipulate consumer sentiment regarding the direction of housing prices. Huzzah! Furthermore, I'm not a psychic, but I do believe that interest rates have nowhere to go but up from here (although it might be a little while before the Fed raises rates) - so there is no doubt that housing prices aren't headed in a positive direction (too lazy to link the articles I've been reading about how bad commercial real estate is... short the sh*t out of commercial REITs)
So, slap a band-aid on this b*tch and lets go back to inflating housing prices. Nevermind the issues with interest rates, housing oversupply, foreclosures, etc - the market is undervalued, right? At least it isn't as bad as it is in China: "Many properties bought for investment are now left vacant and rental yields are low, pointing to a “bubble." Not that epic of a quote - I couldn't find the article that I read earlier today that quoted multiple large property management firms in China saying that they were building and selling rather than holding because it was clearly a bubble.
But, at least if you can't afford rent in China, you can still see Marbury attack the lane.
Entire article here: http://ftalphaville.ft.com/blog/2010/02/01/138151/us-housing-bubble-v2-0/
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