"The Biggest RE Bubble In World History"?
Even before the sales numbers were released today, economists were sounding alarm bells. Yale University economist Robert Shiller, "'I think this is actually the biggest [real estate] bubble in U.S. history and possibly even world history,' he said in a telephone interview yesterday (May 23rd)."
"Mark Zandi, chief economist with Economy.com, said he's worried about the vulnerability of the mortgage-backed securities industry, where hedge funds and other investors have made huge bets. That derivative industry funds many mortgages for home buyers, particularly for low-equity loans. Problems in the mortgage-backed securities market could result in a credit crunch for would-be home buyers."
Even Robert Freed of KB Homes, who has pocketed a few million recently, used the 'B' word. "It's not the bubble in housing. It's the bubble in underwriting."
It's all good for Steve Kalmbach of Pulte Homes. "You'd be surprised how far people are willing to drive to have their American dream."
"'If things continue on as they are for another year or even six months, the potential for price declines is that much greater and the risk to the economy is much more significant,' Zandi said."