Housing and the New Normal

A good site for US housing bubbular info is Dr Housing Bubble. A few of the noobs here could do with a click over there, methinks.

And yes, LTV's of 110% were creeping in here - I do recall a Westpac marketing pamphlet for 'professionals' which offered just that.

But y'all are missing an important aspect of the whole puzzle.

You Cannot expect useful, current or relevant info from the MSM or indeed any organ which depends on ad revenues or continued access to the Corridors of Power, wherever they may be, in a time of transition.

Put simply, they are all too invested in the status quo to be trusted. Hence the predominance of what in t'old days were called 'puff pieces', RE types talking their book, and 'analysis' by reporters which Whaleoil correctly labels 'repeaters'. Nobody there is about to pull the house down on their own heads, so the happy-clappy talk continues.

What we Do have is a transition to the New Normal - consumption around 10-15% less permanently (about the extent to which it was debt-funded), the air going out of bubbles, and reversion to the age-old means of house prices 2.8-3.2 times household incomes, PE ratios in low-mid teens, and savings rates north of 10%.

All this was predicted by numerous authors around the 1990-1993 mark, sensed by artists - try reading the cover notes for Dylan's 'World Gone Wrong' (1993) and say it ain't so, and it is a tribute indeed to the capacity for human self-delusion that so many bubbles have been inflated to keep the Good Times Rollin' since then. Which is precisely the theme of Matt Taibbi's GS piece.

Events in funky li'l NZ are skewed by three factors which y'all can assess fer yerselves:

1 - NZ is a 'haven' destination, and this gives a Lot of insulation, as haven seekers arrive and bring their loot with them. This is an obvious factor in house prices, if little recognised.

2 - NZ can feed itself many times over, and has a wealth of mineral and fuel riches. There won't be the Peak Oil stuff here - the transition can be considerably smoothed thereby, and we won't starve either. Ye cannae say that aboot, e.g. Britain.

3 - There is a strong conversative/conservation streak in NZ (same root, differing implications) which, despite the usual underclass provocations, will see us through in relatively harmonious shape. Ye cannae say that aboot most of Europe.

The glass is, in fact, half full.....