speculation + leverage = bubble[/quote]There were a lot of speculation in 2009-2011 in housing and no other market can you leverage like housing. Yet, it wasn’t a bubble then.[/quote]
But, compared to other times, there was less leverage being used during this time in the housing market. The only reason there wasn’t a bubble in housing at that time was because of the huge deleveraging that was occurring at the same time. The money being pulled out of the housing market at that time offset the money going in…but only briefly. We quickly shot back up to fairly crazy levels (and I respectfully note that some would disagree with me on this). We can’t look to price/rent ratios during this time because the rental market has been affected by this speculation as well — more rental demand because people can’t compete with the investors, and the investors controlling rents in many markets because they (recent/large/institutional investors and speculators) control a significant portion of the rental inventory in many areas.
