Bubble Reading:

With thanks to reader David Torrente, who pointed out some that are new to me, here are some blogs following the housing bubble and its deflation:

And from the MSM:

I've been looking at a few of these blogs occasionally, and they are doing a much better job at covering what's going on in the housing market than are major media outlets (they do tend to focus on the bad news, but except for the fact that long-term interest rates have stayed pretty stable, there hasn't been a lot of good news for the housing market since the Summer.)

Cathy (mail) (www):
Dan Gillmor's blog (he's a former San Jose Mercury News columnist) has been sounding the alarm on the bubble for quite some time.
1.18.2006 8:44pm
Slim Joe (mail):
I'll give you the slow down and mild reduction in sales and prices, but its not a bubble. Think back to the 70s and 80s and buying a car. Back then, you thought about how much it costs-- $15,000, $20,000 etc-- and bought accordingly. But financing innovations changed all that into how much can you afford on a monthly basis? Especially with leases where you didn't even need a down paymnet. Now people buy cars based on the monthly nut, not its selling price.

Housing is the same. The financing revolution has permanently increased the number of people who can buy and that makes the market steady. 15 years ago I could only sell my house to people who could muster a 20% down payment, meet strict credit standard set by limited number of lenders and handle a 30 year fixed, hight rate loan. Now, I can sell to anyone who qualifies under liberal, competitive standards for a no down-payment, interest only loan at decent rates, all of which resembles rental payments more than it does the purchase loans of 10 years ago. That financing innovation means more buyers, more lenders and therefore more capital in this market. Especially in places like the westside of LA, with limited housing and no-growth city councils.

I am told that equities underwent the same revolution when in the sixties they became more accessible to more of the population because of pensions, discount brokers, stock splits, margin accounts and the mental break-through that and ordinary guy could buy stock.
1.18.2006 11:22pm
billb: for SoCal (San Diego, really)
1.19.2006 12:11am
It's a clearly a slowdown or leveling-off (based on sales volume), but I think reports of a burst bubble fail to explain the remarkable increase in inventory without a commensurate decrease in price.

Maybe there are two sub-markets captured in the typical single data set - a sensitive speculative market and a more stable "real" market. Or it could be that the tip of the baby boom hitting 65 is a new source of inventory (perhaps pushed to act now by a perception that the market is at the top).
1.19.2006 9:16am
Mr Juggles (mail) (www):
I personally think there's a bubble in housing bubble blogs.
1.19.2006 10:58am
Duncan Frissell (mail):
Bubble analysis also has to keep in mind that housing tends not to fall as much during slumps as other assets do (absent advancing armies). People still want shelter.

Also owners can "split" their housing up when they need to by renting rooms. It appears that a "room" in San Diego pulls in about $600/month thus reducing carrying costs.
1.19.2006 11:47am
What I would like to see is analysis of individual sub-markets in a particular market--or even some commentary on whether such a break-out is possible and, if not, what that says about our ability to predict the size of a bubble.

Here's why: There is no doubt in my mind that D.C. housing is inflated somewhat. I'm also sure that certain sub-markets in D.C. are very inflated. But it also seems doubtful that the inflation is necessarily present across the board. In D.C., for example, I'd like to see a comparision of:

1. Suburbs versus central city.
2. Established neighborhoods versus new and emerging neighborhoods.
3. Outer emerging neighborhoods versus central emerging neighborhoods.
Many other ways you could slice it.

Lots of broad brush statistics conceal real differences among these different categories. In D.C., the city has been in more demographic flux than at any time in the last 30 years, since, for the first time since the 1968 riots, large numbers of young professionals are moving back into the central city, creating radical change in the downtown area, and many central neighborhoods, at least to my eyes. Some established neighborhoods have seen price increases in the last two years that seem irrational to me, since nothing in those neighborhoods has changed. In many other neighborhoods, dramatic price increases correllate more closely with what appear to my eyes as substantial changes. Its difficult for me, and anyone else, to disaggregate these changes, since property values have a strong local component to them.

It also bugs me that commentators makes sweeping assumptions about buyer preferences, which merely reflect reflect their personal preferences. Thus, one of the bubble bloggers scoffed at condo prices on U Street because it is a "dump," opining that rational buyers would buy in Glover Park, which is prettier. I have no doubt that many share this assessment. But many others--like me--find the U Street neighborhood highly desirable (although I don't live there) because of its distinctively urban aesthetic and central location and Glover Park highly undesirable because of its very different, suburban aesthetic and more remote location. It seems very hard to make assessments based on judgments about neighborhood aesthetics, yet I would think that this too is a big factor that affects housing prices, particularly in a very heterodox urban area.
1.19.2006 12:49pm
Hans Bader (mail):
There's a bubble in Washington, D.C., and parts of California and the northeast, but not in most of America.

David, you wrote earlier about plans to buy a house in Arlington, Virginia. If you haven't bought a house yet, be patient and wait until the bubble bursts to do so.

My little two-bedroom house in Arlington (with some peeling paint, a cracked driveway, and plumbing that leaks) is now assessed at an eye-popping $587,000. Granted, it's right near the East Falls Church metro station and a park, but it's quite small (1700 square feet).

A two bedroom apartment with similar square footage can be obtained nearby for at most $2000 per month -- far less than the $3000 mortgage (plus $500 per month in property taxes) that some unfortunate soul would have to pay to purchase my house at its current assessed value and the prevailing bank interest rate for 30-year mortgages. (Thank heavens I bought the house a couple years ago, when the prices and interest rates were lower, so my mortgage payment is much lower than $3000).

That's $1500 extra to own rather than rent in our section of Metro Washington, D.C.. That looks a lot like a bubble to me. (Even if you factor out principal payments, to reflect the benefits of owning rather than renting, it would still be nearly $1000 extra to own rather than rent).

The current housing bubble makes me and people in my region (metro Washington D.C.) look wealthy on paper.

But 46 percent of all Americans below the poverty line live in owner-occupied housing, and the typical house for such people has 3 bedrooms. I have only two bedrooms. So I have less living space than many so-called poor people in middle America.

That disconnect suggests a regional housing bubble.
1.19.2006 1:01pm
Some Guy (mail):
There's definitely a bubble in this town. Saw a 3BR/2.5BA house with no yard listed for close to a MILLION the other day about a mile from the Huntington Metro stop. Pardon me, but whoever buys that house is poised to steal the title of the world's biggest douche from John Edwards (yes, even if they get a "discount" from the listing price).
1.19.2006 1:31pm