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A housing market quandary

A housing market quandary: two completely contradictory reports on renting vs. ownership

There are three potential areas of concern for the economy in the next 12 to 24 months that I see:

1. Inflation – this looks temporary to me. Demand side effects will probably fade by the end of summer, and supply side bottlenecks should fade within the year.

2. Stock price evaluations – I strongly suspect these are near secular highs and are subject to a serious pullback in the next several years.

3. Housing – The biggest reason I don’t see this as being in a bubble is the lack of “fog-the-mirror” mortgages being originated. Take away reckless lending spurring short-term speculative demand, and there is only so much that the market can deviate from the norm. This means that any downturn would probably be closer to the 4% downturn between 1990 and 1992: