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Be Warned: Mr. Bubble's Worried Again





Actually, I think we will have a not-so-happy ending too.

From New York Times:

Today, nine years after his lunch with Mr. Greenspan and five years after the markets finally did crash, Mr. Shiller is sounding the same warning for real estate that he did for stocks. In speeches, in television and radio interviews and in a second edition of his prophetic 2000 book, "Irrational Exuberance," he is arguing that the housing craze is another bubble destined to end badly, just as every other real-estate boom on record has.

These, in short, are his second 15 minutes of gloom. He predicts that prices could fall 40 percent in inflation-adjusted terms over the next generation and that the end of the bubble will probably cause a recession at some point.

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Good points. For an individual, you cannot claim home equity as savings until you cash it out. For the society as a whole, home equity does not increase net wealth.
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