Good article by Mark Hulbert in Marketwatch on the wacky real estate market that debunks the argument that we can't be in a bubble because so many people are worried that we are in one. The basis for the argument is that a bubble can only form when very few are suspecting that one exists -- since people who are worried about a bubble presumably are less inclined to pay inflated prices than investors who are blithely unconcerned about the possibility.
While Hulbert does not attempt to argue "YES" or "NO" on the bubble question (bubbles are only "obvious" after the fact), he does show that historians who have studied past bubbles have not found support for this argument.
As this particular "NO bubble" argument is one of the key memes fueling a false sense of security for real estate buyers, investors and outright speculators, Hulbert's conclusion is worth shining a light on.
