Housing Prices: Chicken Little vs. Pollyanna

Chicken Little
“The sky is falling”

Pollyanna
“what a perfectly lovely, lovely house! How awfully glad you must be you’re so rich!”

  • No capital gains taxes
  • Thick mortgage backed securities market
  • Fewer new buyers chasing money
  • Falling real estate commissions
  • Rising incomes
  • Changing commuting patterns
  • “breathtaking profit”
  • Active Federal Reserve Board
  • Industry sensitive to interest rates
  • Rising population
  • Middle income wages rising in money terms
  • Median age rising
  • Family size falling
  • Rise in ownership of 2nd homes
  • Rise in telecommuting
  • Home entertainment such as video games eclipsing movies
  • Capitalization and standardization of home building industry (e.g. Toll Brothers)

A moderation in an accellerator suggests just a slow-down in the rate of growth of housing prices to me, but don’t listen to me–I just cashed out a 40% capital gain in my last house tax free and locked in a super low rate from a private equity mortgage lender and didn’t use a real estate agent to buy and used a cut commission agent to sell. Clearly I’m a Pollyanna.