Along with A. Johanson, their biblograghy would give you the impression that there are only 3 experts in this area. There is no other financial economic research on housing bubbles? I doubt that.
What's really telling is that physicists can waltz in and make an original contribution in economics. Does it ever happen the other way around and what does that tell you about the relative brainpower between the two fields?
On the other hand, most economics professors I know can tie their shoes.
Tom & MG, this isn't my analysis - please see the paper. In fig 4, WV is included as the weakest new bubble state (Idaho is next - Idaho?).
I'm surprised that Georgia leads the nation in IO loans and isn't a bubble state. I think loose credit and highly leveraged financing might be a problem even in the non-bubble states.
"What's really telling is that physicists can waltz in and make an original contribution in economics."
What's original about suggesting there's a real estate bubble? (Nothing.)
The paper also relies heavily on work on rational expectations bubbles, which was developed (by economists such as Olivier Blanchard) and has been around since at least the early 80's.
The paper is interesting enough, but where's the supposed original contribution?
There is lots of attractive land in Vest Virginia and buying large tracts there makes perfect sense for wealthy investors.
If interest only loans and the like become a problem, the problem will likely appear quickly in the South and South West once housing price inflation wanes. These areas have questionable protections for labor in any downturn.
Original contribution:
Application of analysis techniques used in the natural sciences to study multi-agent systems (complex systems) to this particular housing bubble phenomenon.
Colorado a new bubble? Hardly... I live in CO, watch the market closely and see no bubble, except for a bubble in foreclosures. Denver prices are flat for single family homes to down slightly for condos.
CR: You wrote that Zhou & Sornette "correctly predicted that the UK housing bubble would 'burst' in mid-2004".
Secondary point: the article points to the "around the end of the year 2003".
Primary point: where on earth do you get the idea (data) to write "correctly predicted"?
Please tell us what time series shows a "burst" in real estate prices in the UK, i.e. by what percent have housing prices fallen, and when did the peak occur?
(Hint: the rate of change has fallen dramatically, but is still positive year-over-year.)
Physicist discover regression to the mean haw haw haw.
Don't get me started on physicist jokes.
Along with A. Johanson, their biblograghy would give you the impression that there are only 3 experts in this area. There is no other financial economic research on housing bubbles? I doubt that.
They aren't making any new land in Alaska.
These guys also predicted that 2003 would be a bear market in stocks.
What's really telling is that physicists can waltz in and make an original contribution in economics. Does it ever happen the other way around and what does that tell you about the relative brainpower between the two fields?
On the other hand, most economics professors I know can tie their shoes.
pgl, I also find it annoying when an author only cites themselves (for the most part). I just thought the graph was cool!
Is West Virginia really a housing bubble state? How?
I agree with you, Tom.
CR, do explain about West Virginia. I almost fell out of my chair.
Tom & MG, this isn't my analysis - please see the paper. In fig 4, WV is included as the weakest new bubble state (Idaho is next - Idaho?).
I'm surprised that Georgia leads the nation in IO loans and isn't a bubble state. I think loose credit and highly leveraged financing might be a problem even in the non-bubble states.
Best Regards!
My guess on WV is that its spillover from the hot Northern VA market--people moving further and further west of DC.
"What's really telling is that physicists can waltz in and make an original contribution in economics."
What's original about suggesting there's a real estate bubble? (Nothing.)
The paper also relies heavily on work on rational expectations bubbles, which was developed (by economists such as Olivier Blanchard) and has been around since at least the early 80's.
The paper is interesting enough, but where's the supposed original contribution?
There is lots of attractive land in Vest Virginia and buying large tracts there makes perfect sense for wealthy investors.
If interest only loans and the like become a problem, the problem will likely appear quickly in the South and South West once housing price inflation wanes. These areas have questionable protections for labor in any downturn.
All of America has very questionable protections in a severe downturn.
Original contribution:
Application of analysis techniques used in the natural sciences to study multi-agent systems (complex systems) to this particular housing bubble phenomenon.
Colorado a new bubble? Hardly... I live in CO, watch the market closely and see no bubble, except for a bubble in foreclosures. Denver prices are flat for single family homes to down slightly for condos.
CR: You wrote that Zhou & Sornette "correctly predicted that the UK housing bubble would 'burst' in mid-2004".
Secondary point: the article points to the "around the end of the year 2003".
Primary point: where on earth do you get the idea (data) to write "correctly predicted"?
Please tell us what time series shows a "burst" in real estate prices in the UK, i.e. by what percent have housing prices fallen, and when did the peak occur?
(Hint: the rate of change has fallen dramatically, but is still positive year-over-year.)