I'm still waiting

When I started blogging in early 2009, I pushed back against the view that the housing market had gone through a “bubble“. I pointed out that prices in countries such as Canada had risen as much or more than in the US, and yet had not crashed. Commenters told me, “you just wait, the Canadian market is starting to correct.” The same predictions were made about the Australian market.

More than 12 years later, I’m still waiting. Some of my bubble commenters have finally given up and drifted away. In fact, it looks more and more like real housing prices are persistently higher in the 21st century, due to “fundamentals” such as NIMBY regulations and very low equilibrium interest rates.

That’s not to say that real house prices cannot fall in the next few years. They fell in a few markets in 2006-12, and could do so again. Real asset prices in efficient markets move around unpredictably.

Here’s The Economist:

The government in New Zealand, where prices are rising at an annual rate of 22%, has taken steps to dampen speculation. The governor of the Bank of Canada has worried about “excess exuberance”, and plans to watch the housing market closely.