Fed Induced Bubble Part Deux

More proof that Bennie and Bubbles have created a 2nd housing bubble that will pop again. Prices are up 35% from their lows even though home sales languish at 1999 levels. Mortgage applications are at 1998 levels when inflation adjusted home prices were $190,000. Today inflation adjusted prices are $240,000. This bubble is 100% driven by Federal Reserve monetary policies and the buy to rent scheme hatched by Wall Street and their puppets at the Fed and Treasury. When this bubble pops (they always do) home prices will drop 20% to 30% from current levels. The dupes who’ve bought in the last two years will be underwater and over their heads. Some things never change.

For some perspective on the all-important US real estate market, today’s chart illustrates the inflation-adjusted median price of a single-family home in the United States over the past 44 years. There are a few points of interest. Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased — increased. All those gains and then some were given back during the following 6.5 years. Over the past two years, however, the median price of a single-family home has trended significantly higher. More recently, the inflation-adjusted price of the median single-family home has declined and is now testing support of its two-year upward sloping trend channel.