[lbo-talk] real estate bubble?

Doug Henwood dhenwood at panix.com
Tue Sep 23 10:42:04 PDT 2003


boddhisatva wrote:


>There is a physicist out there who has examined financial bubbles and
>seems to have a pretty well-regarded mathematical test for them. He's found
>that the majority of financial bubbles have a certain mathematical signature
>which betrays the underlying cooperative "herding" behavior among investors.
>Examining both the U.S. and U.K. real estate markets he finds evidence of a
>bubble forming in the U.K. but not the U.S..

The housing market is different from stock or bond markets. Turnover is relatively slow. The average holding period for a T-bond is something like 30 days. With heavily traded stocks, I'll bet the entire float turns over every few days (sorry, don't have stats at hand). Out of 108 million owner-occupied housing units in the U.S., about 1 million new and 5 million existing turn over in a year. Might that affect the "signature"?

Doug



More information about the lbo-talk mailing list