Since it's 'sentiment' who knows what it means?
"Hey, Joe: think it's a good time to jump into the housing market?" "Sure!"
Does that mean Joe is going to buy a house? I doubt it.
Doug will say that it's just like this:
"Hey, Joe: aren't these Internet stocks swell?" "Sure!"
But they didn't all go out and buy pets.com ...
If 22% of the people they asked said yes, that doesn't mean 22% of households are going to go out and "jump into the housing market" -- home sales (including -- in fact, dominated by -- the case where you sell one and buy a new one) is some single-digit percentage of households per year these days (though yes, Doug: at an all-time high!). Also, total home-ownership is around 66% and climbing by things like .1% here and there (I think the range of the last decade is like an increase of 3%? But given that the number of households is growing in the US, this is a significant number).
> what are the dangers of this explosion of enthusiasm?
The "same old danger" is that people who don't know what they are doing will do something that they can't support later and it will lead to ruination, both personally and systemically. In Doug's scenario, that's everyone who gets in now. But in reality, I think it's much less of a doomsday scenario.
> We're told, by everyone from the local convenience store
> soft drink dispenser engineer to our own Jordan H. that increased
> home "ownership" (or, to be annoyingly precise, loan payments
> towards that goal) is a fantastic thing.
The thing I've been trying to point out is that "buying a house" (even in a frothy market) isn't any one particular thing: yes, there are some speculators. And yes, some of them will go under. And some of the mortgages they take out will go into default. And yes, this might happen at a greater rate than the normal steady state.
But it's not a "formula for disaster" ... and it won't happen much to 'hapless' people (though I'm sure the NY Times will find said hapless people and put them on the front page and shake their heads and wag their fingers, and Doug will tut-tut along with them). And in the mean time, the overall growth of home ownership is, yes, I do believe, a good thing. But it will also have some downside: it will contribute to the gutting of the cities, it will eat up open land and turn it into sprawl, it will make highway congestion worse.
What's the alternative? In Doug's world, you put blame on people who want to buy their way out of their sh*thole apartment (hey, everyone should do what he did: get a nice rent-controlled place on the Upper West Side!) and their a*swipe slumlord, plus some on the greedy-bastard bankers and call all of them "mad" ...
Well, guess what: in every market, there are only two participants: the specs and the hedgers. If the specs lose their shirt by buying at the wrong time, there's no love lost. But no one ever talks about the other side: people who sell at the bottom. That's because there's some sympathy for people who "have" to sell; and there's just as many people who "have" to buy now. And most of the people who "bought at the top" of 1990 are just fine.
So what's different between this and pets.com? Real estate doesn't go to zero (unless you bought near Love Canal or similar) when the market turns. Your "investment" (equity) can go to zero (and beyond!) but a) there's no margin call (unless you sell) and b) it doesn't go "worthless" just because your equity is zero or less: you're still living there, it's still providing you shelter, etc.
So there you have it.
/jordan