Friday, December 29, 2006

Houses of Cards

The great Debt Bubble was begat by the Real Estate Bubble. Below is a chart of how overvalued US single family homes really are. It compares new single family house prices to the Consumer Price Index since 1965. Notice the sharp divergence after 1995; it got even worse after 2000.

Since 1965 CPI inflation has gone up 5x, house prices are up 12x. Care to guess how much more home mortgage debt there is since then? Drumroll......46x. In 2000 that figure was "just" 23x.

Sudden debt, indeed...


  1. Hellasious,

    The housing market tanks. Then the stock market is hot.

    Our attention span it seems is virtually nil. Given that we are easily distracted to the next easy bucket of greed possibility.

    Ponzi scheme. Shell game.

    What will keep it propped up this time? Can it be propped up for much longer?

    How do you think it will all play out?