[quote=AN][quote=CA renter]
Remember that 1997/1998-2001 marked the beginning of the bubble. People were already standing in lines to buy houses in 1999/2000 here.[/quote]
Really? So you think we’re in a bubble when the price is not declining? We’ve seen that 1996 is about where the bottom was, yet you think 1997 on is the start of a new bubble?[/quote]
Yes, a bubble is marked specifically by prices that are not declining. The bubble is what happens on the way up.
BTW, I said that it was the beginning of the bubble, and I should have more clearly stated that the bubble “mentality” really began in the 1997-2001 period, maybe because of the cap gains exemption. The normal RE cycle (some might call them bubbles, but these cycles are pretty common in California) should have peaked in about 2001. Prices were already beyond reach for most people, and we were entering a recession, and you could already see the effects in the sales volume and prices — they were going down.
That was when the market changed from the peak of a “normal” top of the RE cycle and began to get really crazy because of the **credit** bubble. Rates were suppressed to abnormal lows which forced normally conservative investors into riskier investments…enter the MBS/CDO/CDS debacle from which they are still trying to unwind.
BTW, prices were not underpriced in the 1990s unless you think prices were “below market” for all the decades that came before that period. Prices have been fairly steady, trading in a relatively predictable channel, until we got the credit bubble. If you want to see “market” prices, let’s stop all the foreclosure moratoriums, loan mods, “rescue” programs, artificially low rates, an end to tax credits and all the other manipulations which have caused prices to go well beyond their natural levels. Only then could we see what could be considered “market” prices. We are not even close in this market.
