Bubble Bubble

Paul Krugman has a good piece on the housing bubble today:

That Hissing Sound
By PAUL KRUGMAN
This is the way the bubble ends: not with a pop, but with a hiss.

Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust.

So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers are no longer willing to pay. And the process may already have started....

I, however, was writing the same thing back in April (not that I was the only one):

Our Schizophrenic Housing Market
Dan Ackman, 04.27.05, 11:16 AM ET

Yesterday, the news that new U.S. home sales were up 12.2% in March to record levels caused some confusion, as most economists had expected a slowdown amid a slight jump in mortgage rates and a decline in housing starts the same month.

Sales climbed to an all-time high, a seasonally adjusted annual rate of 1.43 million units--bettering the old mark of 1.3 million units set last October, the U.S. Commerce Department reported. Prices were up sharply, too. The gains were in all regions but were most pronounced in the South, where new-home sales jumped 18.6%. In the Northeast, the rise was just 1.2%.

This disparity highlights the schizophrenia in the U.S. housing market, both in terms of price and construction. Thus the answer to the debate about the housing bubble may be, "It depends on where you are."...