Are house prices a new bubble?

On Friday, I posted five economic questions I'm frequently asked . I'll post some thoughts on each of these topics over the next couple of weeks. A common question is: Are house prices in a new bubble?  My short answer was: No.  Here is an explanation. First, we need to define a bubble. Way back in April 2005, when I was very bearish on housing, I wrote: Housing: Speculation is the Key . From that post: I have taken to calling the housing market a "bubble". But how do I define a bubble? A bubble requires both overvaluation based on fundamentals and speculation. It is natural ......(read more)

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