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The Social Contagion Effect of Housing Markets
The larger the boom, the larger the bust. The same mechanism that drives the increase in prices also brings it on done. When the cycle becomes negative people sell and there's fire sales and prices come down. If we were using that rule of thumb, that would equate to price falls of about 50%. So that's how I approach housing markets conceptually and philosophically. At that point I usually say to myself, well the burden of proof is on the bulls to tell me why it won't happen. Tomorrow begins housing bubble week. It's going to be huge. Get ready, strap on your seatbelts.