Wednesday, June 14, 2006

Housing Bubble?

A student emails me to ask about the housing market:

Do you think there is a housing bubble in the US?
I have not myself studied current market valuations, but I did take note of this article on the housing market in the Financial Times a couple days ago:

Housing boom will not end in a crash, says Harvard

“Although housing prices are stretched, it is hard to see the catalyst for a crisis in the market,” says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard. “The overvaluation looks pretty well balanced by longer term supports for house prices, so we may just see a few years with little action. Houses will revert to being something to live in rather than money makers.”

Okay, so the housing market has "reached what looks like a permanently high plateau." Now that's reassuring.