Watching The House Price Bubble Burst

How the current housing boom ends could decide the course of the entire world economy over the next few years.

1 minute read

June 17, 2005, 10:00 AM PDT

By Zvi Leve


According to The Economist, "the global housing boom is the biggest financial bubble in history.... In many countries around the globe, house prices are already at record levels in relation to rents and incomes." Many people contend that houses are fundamentally different from stocks and hence are less vulnerable to a rapid meltdown, but there are troubling similarities between the house-price boom and the dotcom bubble. "The recent surge in house prices has gone hand-in-hand with a much larger jump in household debt [and] as a result of such borrowing, housing booms tend to be more dangerous than stockmarket bubbles, and are often followed by periods of prolonged economic weakness."

Thanks to Zvi Leve

Thursday, June 16, 2005 in The Economist

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