This graph "“ again from Bill McBride "“ shows us how in general terms housing is close to a criticality.
You can see that price-to-rent is approaching multi-decade lows. However, 30 year real interest rates are also near mulit-decade lows.
If housing were homogenous and there weren't significant and idiosyncratic transactions costs involved in renting out single family units, you would see a genuine criticality. One month there would be lots of "excess supply" then it would cross a line and boom within-in days it would all be sold to investors.
The gritty nature of housing, renting and the loan market means that this can't happen. But, you can none-the-less have a very rapid acceleration where it seems like nothing is happening and then all of a sudden everything is happening at once.
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Tuesday ~ February 28th, 2012 at 5:52 pm
[...] – Are we nearing US housing criticality? [...]
Tuesday ~ February 28th, 2012 at 8:00 pm
you still have 70% of the poor who cant afford both food & rent & a quarter of homeowners paying half their income on their mortgages…so how do you get criticality? pixie dust?
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