http://knowledge.wharton.upenn.edu/article/1194.cfm

http://knowledge.wharton.upenn.edu/papers/1292.pdf

Whenever housing prices soar, experts wonder whether the cause is a
speculative bubble that could eventually burst, causing widespread
distress. In "The Anatomy of a Housing Bubble" Grace Wong, a professor
of real estate at Wharton, offers ways to spot future real estate
bubbles in time to introduce corrective measures before the damage
takes its toll. Wong's research explores the Hong Kong housing market,
which saw a real increase in prices of 50% from 1995 to 1997, followed
by a real decrease of 57% from 1997 to 2002.

Steve wrote:
Whenever housing prices soar, experts wonder whether the cause is a
speculative bubble that could eventually burst, causing widespread
distress. In "The Anatomy of a Housing Bubble" Grace Wong, a professor
of real estate at Wharton, offers ways to spot future real estate
bubbles in time to introduce corrective measures before the damage
takes its toll. Wong's research explores the Hong Kong housing market,
which saw a real increase in prices of 50% from 1995 to 1997, followed
by a real decrease of 57% from 1997 to 2002.

Unless I'm missing something, this means you lost about 35% even if
you bought before the runup. Yikes.

In article ,
Steve wrote:
Steve wrote:
In "The Anatomy of a Housing Bubble" Grace Wong, a professor
of real estate at Wharton, offers ways to spot future real estate
bubbles in time to introduce corrective measures before the damage
takes its toll. Wong's research explores the Hong Kong housing market,
which saw a real increase in prices of 50% from 1995 to 1997, followed
by a real decrease of 57% from 1997 to 2002.

Unless I'm missing something, this means you lost about 35% even if
you bought before the runup. Yikes.

Though it's a hard example to generalize from, I would think. In 1997
you had the much-anticipated handover of Hong Kong to China, which
I'd have to imagine caused all sorts of gyrations in the real estate
market there. The Asian currency crisis also occurred in 1997,
wreaking havoc on the Hong Kong economy. According to Wikipedia,
in August 1997 the currency problems prompted Hong Kong's monetary
authority to nearly triple interest rates overnight (from 8 percent
to 23 percent). That would have had a devastating effect on housing
prices, which often get bid up or down based on how much people can
afford to borrow.

I'm not sure you'd get the same sorts of signs of a bubble or its
burst in a more politically and economically stable North American
or European market. (Yes, the US dollar has had its ups and downs,
but generally hasn't swung as far as fast as many Asian economies
did in 1997.)

Which is not to say bubbles and the bursting can't happen in the US
as well. They can and do. The big ones tend to be somewhat
localized, though.

John
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