Housing Bubble Debates

Thanks Calculated Risk

If employment had gone up normally, from 2001, housing would have been better aligned with unemployment. It is as if housing misread Okun's Law.

But the story is the geographical diversity of the housing boom, some regions were expected to generate jobs in the recovery and high demand for housing expected. But there is an element of central planning going on with the Fed and Congress regarding housing. So there appears a single mortgage rate across regions, which pushed migration a bit out of balance. The period between 1991 to 2002 resulted in a an unjustified economy of scale. The mortgage system went nation wide, mainly over the Internet; driven by a central plan from Washington/Wall Street.

The mismatch between central and local differences yields excess mobility as housing balances leans to central planning. The process is aided by technology, the market heats up more than necessary.