So yesterday’s front page news was that the housing market isn’t going to start dropping any time soon.
One had to read just a little further to find that the source of that bold headline was– surprise!– a Realtor.
What the spice else is a Realtor going to say? “Yeah, people will be losing their shorts soon. I sold everything I own two months ago.”
Actually, I would believe the original premise, except I think there are a tremendous number of people who have recently bought real estate strictly as an investment. They have no real intent to ever live in those homes. But the numbers that drive new home construction, tax revenue projections, urban planning, mortgage rates, and a number of other important factors– these numbers don’t take the investors into account.
To the outside world, the investors are new residents.
Those ghost residents, the investors, are the air inside the bubble. It’s not going to burst, though you’ll hear that inappropriate analogy a lot on the news. But it’s going to deflate, and deflate rapidly, the first time the investors get nervous. And a lot of them will lose their shorts. It’s the dot-com travesty all over again, where people who didn’t know a router from a radish were shoveling their savings into hideously dangerous tech stocks without a backwards thought.
By the way, buried on today’s financial page, was a much smaller article noting that the housing market is cooling.