Serious people don't say assets are underpriced. That's for the real estate seminar snake-oil circuit.
Chart: US home prices are rising too quickly - pic.twitter.com/OuSYh0E9Fa— (((The Daily Shot))) (@SoberLook) February 24, 2017
Who could disagree? One could note, I suppose, that it is stacking the deck to set the indexes to 1996, during a cyclical low-point in real estate values. But, if prices are never too low, that would be exactly where you should set them, right?
I have reproduced this graph with a few cities added. One might argue that "US" home prices aren't rising too quickly. But, prices are never too low. So, there are only cities that are uninteresting - not worth looking too closely at - and cities that seem to be too high. This is the Overton Window. Nothing exists outside. Only a chump would look out there.
Here's a Zillow listing that seems typical for parts of Atlanta. As of this posting, estimated rent is $900/month. With a "predatory" loan - 0% down and 7% interest, monthly payments would be $500. Is there anyone today that would even be willing to make that loan, even if they knew it would be profitable?
US home prices are rising too quickly, folks. What else do they ever do? It seems like a never-ending battle. We gots to keep fighting to keep those prices low, folks, or else those rubes in Atlanta might be convinced by some greedy banker that they have any business owning a home, and since they don't know nothin', Lord knows what crazy price they'll bid it up to. And, we all know how that turns out, don't we?
PS. Right after I saved this post, I clicked on twitter, and my feed was loaded with tweets exclaiming, "Guess who Trump selected to chair the Council of Economic Advisors? That idiot who predicted the Dow would hit 36,000!" Kevin Hassett could literally invent functional cold fusion, and his grave stone will read, "This idiot made a bullish prediction that didn't turn out well."
PPS. Consider this a sort of mea culpa regarding the first PS. Brad DeLong has a good post taking down Dow 36,000.