Hmmmm, not sure what is meant by “more evenly demonstrated in every other market in the U.S.?” If you are speaking in terms of geographic location and cost of rising prices there are a few reasons why this is more pronounced in certain cities such as ones with larger populations such as DC, Orlando, San Fran, Diego, LA, etc… I’m not going to go into reasons why certain cities experience a frothier bubbly top then say Lincoln Nebraska, but there are obviously reasons.
I think you can see low credit affecting just about every part of the market currently. Look at how much car sales have tapered off recently due to tightening of credit. You have also seen the market supported by low rates. When rates are low it makes a lot more sense to risk money in a stock that after doing GAAP on it that will return 8% a year. Now if rates rise and you can get 5% in a money market is the extra 3% really worth risking. What you will find as rates go up much more is a pull back out of the market earnings be dammed.
Some affects of easy money.
1. Higher housing prices based on fundamentals.
2. High consumer debt based on fundamentals.
3. Reform on credit bankruptcy laws.
4. Reform on credit card payment laws (occurred right before rate hikes).
5. Weakening dollar do to large amounts of loans.
6. Increases in FOREX trading.
