Is there a housing bubble in the United States?

House prices in the United States have been nationally declining since they peaked in 2005. The exact cause of the bursting of the housing bubble is a subject of vigorous debate, but a number of factors are commonly cited. These include an unsustainable ratio between incomes and the amount spent of housing (whether via a mortgage or rent), low interest rates (encouraging more people to borrow), and sub-prime lending (where mortgages were granted to high-risk applicants).

Implications to Other Questions

Is Fannie Mae and Freddie Mac a huge risk to the economy?

Experts and Influencers

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Agree

Experts In Economics

Nouriel Roubini Economics Professor

Agree

[As far as I know, Nouriel Roubini of Roubini Global Economics is the only well-known economist flatly predicting a housing-led recession in the coming year. Most forecasters consider his call alarmist, and many Federal Reserve officials remain optimistic.]

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25 Aug 2006 Source

The Economist Politics and Business Magazine

Mostly Agree

The housing boom was fun while it lasted, but the biggest increase in wealth in history was largely an illusion.

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16 Jun 2005 Source

Disagree

Experts In Real Estate

Paul Milstein Business Professor

Todd Sinai Business Professor

Disagree

...basic economic logic suggests that this apparent evidence of a bubble is anything but. Even in the highest-price cities, housing is, at most, slightly more expensive than average. Here's why: While house prices over the last decade have gone through the roof, the annual cost of owning a house has not.

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19 Sep 2005 Source

Experts In Economics

Ben Bernanke U.S. Federal Reserve Chairman 2006-

Disagree

Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.

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20 Oct 2005 Source

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0 Points Benja 13 Sep 2008 General Comment

Ouch. Man those professors were wrong.