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Some Housing "Bargains" Still Exist In the Western World
By Dr. Duru written for One-Twenty
February 13, 2006
I continue to have trouble keeping up with the breaking news from the busting housing bubble. The latest "must read" is a report from Demographia called the "2nd Annual Demographia International Housing Affordability Survey (2006)." In this survey, you can get a quick summary of the Western World's least affordable housing markets and a list of some of the markets that remain affordable. Deomgraphia compares median housing prices to median incomes; a very common yardstick of affordability. This survey certainly vindicates Dr. Duru's latest move...!
Notice that I chose a positive spin on this news. The news coming out of the housing bubble is always so dire, I decided to take a different spin this time. I also have to give credit to this find where it is due. I started from the latest bear warning from my favorite perma-bear Bill Fleckenstein titled "Notes from a housing bubble's bust." In this article, Mr. Fleckenstein quotes extensively from an article in a recent edition of the Sydney Morning Herlad. On February 7, 2006 an article appeared titled simply "Slump hits home" that speaks in great length about the damage being done to the Sydney, AUstralia economy as its housing bubble winds down (crashes?). Long ago, I learned the lesson that you must read sources for yourself to generate your own opinion. As it turned out, I got an even more important source out of this article. This is where I found out about the survey conducted by Demographia. Finally, after reading through the highlights of the survey I realized that there was more to this than the typical alarms about the housing bubble that we have heard a million times over. In so many words, there remain affordable housing markets in the Western World..and in places that offer a relatively decent standard and quality of living. The housing bubble may indeed be in for a big crash, but it is still debatable whether such a crash will take out the entire American economy. (I have written earlier about Greenspan's willingness to sacrifice some parts of the economy as the Fed goes about trying to dismantle the housing bubble they created). Even the Sydney Morning Herald talks about the crash as being a Sydney-area specific problem. Of course, time will tell. In the meantime, be careful out there!