Santorum brought it up, between moralizing.
Do the plain and simple first, the obvious. What is the energy content in house construction? Direct variable energy costs during construction are about 10%. Direct energy costs in lumber harvesting is likely about 15%. So 25% of new housing prices will go as energy. Construction people constantly talk about gas prices and electrical bills. Add to that, the Fed was chasing inflation on the way up, about six months behind the curve. Energy prices peaked at nearly triple their previous low. So just the shaping of entropy accounts for nearly a 75% swing in home prices.
I am taking Santorum's side on this issue. The cause of the bubble was denial of the energy shortage until too late, Santorum might just catch the next catastrophe, plus one for him.
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