Read it at Dr. Housing Bubble
The case of having a Japan like correction in our real estate market grows stronger as each year goes by. The entire notion of zombie banks derives from the crisis in Japan. Shadow inventoryand the suspension of mark-to-market accounting are part of the life support that is keeping many US banks operating. Two decades later, with low interest rates and no signs of real estate values going up, the Japanese housing market is virtually stuck in a holding pattern. One thing is now different however as Japan is now starting to run trade deficits. Japan recently posted a record trade deficit because of a strong yen and rising imports on fuel. Yet the real estate market has yet to recover and is back to 1980s values. Can you imagine housing values in the US going lower or sideways well into the 2020s? Hard to believe but let us examine a few areas where the pattern is playing out on a similar note with new data.
A mirror in the real estate sun – Japan posts record trade deficit while real estate values go deep into the 1980s. US has decade long collapse in real estate values in spite of record low mortgage rates. The path of two lost decades in US real estate values is looking very similar to Japan.
by Dr. Housing Bubble