Each time home prices grow, forming a trend, we are getting suspicious: could it be a bubble? There is a reason to be suspicious this time: S&P/Case-Shiller 20 City Composite Home Price Index (FRED) reveals an upward trend from 2012 until 2017. It is not enough to qualify this trend as a bubble, though. Bubbles have their logic, causes and actors. We’ll try to apply basic features of housing bubbles to the current situation in the U.S. housing market. Among factors shaping housing bubbles, there may be dominant ones. If supported by statistics, these factors could be used as tools for analysis. With some degree of caution, of course. If the past can teach us something then it makes sense to go back to the U.S. housing bubble of the 2000s and see what shaped it.
Source: Andrew Zanegin