After Seven Lean Years, Part 1: US Residential Real Estate: The Present Position And Future Prospects

"Prosperity" based on serial asset bubbles and near-zero interest rates is neither real nor sustainable.

Longtime readers know I have been covering residential housing since mid-2005. In those 8+ years, housing has proceeded through a cycle of bubble-bust-echo-bubble: now the echo bubble is crumbling, for all the same reasons the 2006-7 bubble burst: a prosperity based on asset bubbles and low interest rates is a phantom prosperity that cannot last.

Correspondent Mark G. has written a three-part series on the current state of the residential and commercial real estate (CRE) markets. Part 1 addresses residential real estate.

The broad context of this analysis is straightforward: an economy based on ever-rising consumption falters when real household incomes stagnate or decline. Real income for the bottom 90% has been stagnant for forty years, and has declined since 1999.

More