Greg Rosalsky at NPR reports that now that home prices have surpassed the peak that preceded the 2000s housing crash and many people are worried we are in another bubble… (NPR)
A new study by Gabriel Chodorow-Reich, Adam M. Guren and Timothy J. McQuade look at 2008 has some good news for homeowners in 2021…
GO BACK FURTHER THAN 2008: Charles Kindleberger wrote a book called Manias, Panics and Crashes that looked at the invention and spread of steam-powered locomotives in the 19th century and the bubble that created…
- “Investors got over-excited about the economic changes the new technology brought about. They began seeing the sky as the limit. They over-speculated on land near railroad stops…At some point, reality kicked in, and prices began to fall. Once prices fell, investors couldn’t pay their debts, and that led to a crisis.”
SAME THING HAPPENED IN 2008: The fundamental value of living in places such as San Francisco, New York and Boston and other superstar cities really did change as tech and finance boomed. They drew in people from around the world who wanted good-paying jobs. Cities also got safer and prettier. But then homebuyers got over-optimistic about housing.
- Chodorow-Reich says “And homebuyers getting over-optimistic became a serious problem because of the big role that mortgages play in financing homes.”
COULD THAT HAPPEN TODAY? Obviously, it is hard to say and you’ll have to read the full piece to know more there could be a problem if remote work does not pan out the way some believe it will…