Create an Account
username: password:
 
  MemeStreams Logo

MemeStreams Discussion

search


This page contains all of the posts and discussion on MemeStreams referencing the following web page: Housing Bubble Trouble. You can find discussions on MemeStreams as you surf the web, even if you aren't a MemeStreams member, using the Threads Bookmarklet.

Housing Bubble Trouble
by possibly noteworthy at 10:49 am EDT, Apr 2, 2006

WITH NEW HOME SALES DOWN 10.5 percent in February, and with home prices declining for the fourth month in a row, it's high time for a sober look at the consequences of a major housing correction.

Roughly a quarter of the jobs created since the 2001 recession have been in construction, real estate, and mortgage finance.

Consider the price-to-income ratio (above, right), an obvious measure of affordability. This ratio has reached an unprecedented level in the bubble markets. While this ratio hovered around its average of 4-to-1 for the past 30 years, it has zoomed to nearly 8-to-1. The current figure is 3.6 standard deviations from its average level, which, if the data have a normal bell-shaped distribution, means the odds of the price-to-income ratio reaching this level would be less than 1 in 300. In other words, it is off the charts.


 
 
Powered By Industrial Memetics