Will US Housing Rust or Bust?

Until early this year, I steadfastly argued that US housing markets were far from bubble territory, supported as they were by strong fundamentals and buttressed by what I saw as attractive ‘valuations,’ at least by my admittedly crude metrics.

Until early this year, I steadfastly argued that US housing markets were far from bubble territory, supported as they were by strong fundamentals and buttressed by what I saw as attractive valuations,' at least by my admittedly crude metrics.

With fundamentals deteriorating and housing no longer cheap, in February I switched to the froth' camp, arguing that house price appreciation and housing activity had peaked. In the event, I was too early: house price appreciation is still rapid, and the evidence for a peak is mixed. Although housing starts have declined from February levels, housing demand is still booming, with traditional sales and lending growth at or near records, and condominium sales accelerating. So it's time to mark myself to market. Is the call wrong?

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