Well said, cyphire. I tend to agree with just about all of your points – predictable cyclicality driven by a herd mentality, underlying unaffordability, sensitivity to interest rate increases… Even your analogy with professional money managers investing regardless of fundamentals and thereby concentrating a lot of future market risk into a few very broad and bad events that they will say no one could plan for.
I hope we’re right. I want to buy a home some day without forfeiting an arm and a leg! I do think that prices in coastal California may well have gone up pretty permanently because of its high worldwide ranking as a place to live and an explosion of the mobile wealthy across the globe, and because loans with government guarantees and/or low early payments have arrived and will never disappear. But that hasn’t killed the up and down cycle altogether, and I think we’re heading down now.
