Not again! A new US housing bubble inflates (or not)

Is a new US housing bubble inflating? US house prices have been on the march with global prices. Is this a rerun of the pre-GFC period when prices were driven wild by the worst collapse in lending standards in history? Or is this something different?  Deutsche is worried:

Around many parts of the world housing markets have surged during the pandemic. Huge stimulus, low and suppressed interest rates, government tax incentives, demand for more space in the new world, and limited supply have created a boom that surely few could have predicted when the pandemic started. Today’s CoTD puts the boom in perspective in the US. Real home prices were the same in 1999 as they were in 1894. So home prices were range bound around inflation for over 100 years. Over the next 7 years they rose over 60% inflation-adjusted before slumping 35% in the next 6 years. From these lows, they are now back up nearly 55% and less than 1% off their all-time real adjusted highs and over10% above pre-pandemic levels. They will probably hit record real adjusted highs when the latest data is released next week. So, the scale of the rise is nearly on the same national scale as it was in the lead-up to the US housing bust that precipitated the GFC. A new paradigm or a huge worry on the horizon?

But, says 16 veteran blogger of the US housing market, Calculated Risk, not so fast. Lending standards are solid this time and valuations nowhere near as stretched:

He concludes:

  • Prices are elevated.
  • Some of it is COVID distortions which may see local declines as they reverse.
  • Some of it is low mortgage rates.
  • Historic lows in sales inventory is the major driver.
  • There are some signs of that bottoming as the pandemic passes.
  • There is no threat to the financial system.
  • It’s not a bubble because there is no speculation.

In my experience, CR is an excellent judge. Relax!

Houses and Holes


  1. If CR is correct, buy property in the US because as we’ve seen down under, there’s plenty of scope for the bubble to grow. May as well enjoy the ride

  2. Ronin8317MEMBER

    A lot of it is pent up demand, however if the price rise continues, the lending standard will drop. The pattern is unavoidable.

  3. DingwallMEMBER

    This time it’s different ……….. everything is awesome and it will go on foreva!!!! 🎉 🎉 🎉 🎉 🎉 🎉 🎉 🎉 🎉
    Free money for everybody!!!

    Edit: I also get the impression people are so excited, they are buying 2-3 houses not just the one


    Port Of LA Volumes Are “Off The Charts” … By Kim Link-Wills of Freight Waves / Zerohedge

    The Port of Los Angeles continued its record-setting streak, posting the busiest April in its 114-year history.

    “It’s truly been an unprecedented run here in LA,” Executive Director Gene Seroka said during a media briefing Thursday.

    The Port of LA handled 946,966 twenty-foot equivalent units (TEUs) in April. “That’s a 37% spike compared to last year, when global trade dropped with the onset of the pandemic,” Seroka said. “This was by far the busiest April in the port’s 114-year history, outpacing the previous record set just back in 2019 by a hefty 29%.” … read more via hyperlink above …

  5. A few points which are missed in CR analysis:
    1. Data is lagging, badly. It’s minimum of months before settlement data comes through Core Logic or other sources.
    2. Aggregates don’t matter, it’s all about concentration of loans. If 1% are taking stupid loans, then that’s all you need to flood the market as soon as those loans turn to the proverbial.
    3. We are in a highly anomalous environment. Who knows how much of the surge/support in incomes is just stimulus froth.
    4. Much of the speculation/fomo is based off historically low stock of detached houses on market. What happens when this volume normalises.