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This is the easiest myth to debunk; affordability, as a percentage of disposible income, is already non-existent. "higher and higher payments" on an item that is in surplus? Ummm, I don't think so ;). Unless, of course, you're referring to the removal from the market of products like...

Oh. So you and the neighbours will conspire to restrain trade in homes? Will you break the kneecaps of anyone who needs to move away and must sell? What about the people in your area that die? I remember when tech stocks were all the rage, and were in decline, people said exactly the same...

Building costs have dropped in half. Property is nowhere near cheap in the USA yet. Let me know when unlevered property net rent yields are similar to MBS yields. Until then...

Long-term interest rates. The financing used to purchase long-term assets. Also, spreads are widening and will continue to widen as mortgage lenders experience defaults. Sure, but only a fool or a moron would take the risk of financing a long-term asset with overnight money. The Fed only...

You'd think lumber prices would rise, and eventually they will, but actually they are down considerably. http://www.nahb.org/generic.aspx?genericContentID=527 Lumber prices dropped from a peak of $474/1000 board feet on August 13, 2004, to $238/1000 board feet on March 21, 2008. So...

But the houses are far from cheap, and interest rates are on their way up. With official inflation now at ~4%, and inflation in almost every commodity well into the double digits, it will likely be a long time before you ever see interest rates this low again on mortgages.

Interest rates in the UK are not particularly high. Not by historic standards. If you follow the argument, the price of a house would come down enough that the payments wouldn't be the problem. And furthermore, high rates mean all those ARM holders would end up losing their homes (but not...

If you lived in Texas in the mid-late 1980s, or in many parts of Canada that had high prices during the resource booms of the 1970s and early 1980s -- you could easily buy houses for less than their construction and material costs for most of the 80s and a good chunk of the 90s. Building new...

It will go down even worse than the 'theory' would predict in an environment of high interest rates because high interest rates would put a lot of additional supply on the market by way of foreclosures that would not exist when interest rates are low. Just like there was valuation overshoot...

Air Canada has 'flight passes', whereby, you pay between $560 and $800 per month, and you can travel, on an unlimited basis, anywhere they fly in Western, Eastern, or the entirety of North America on Saturdays, Sundays, and Tuesdays. So if you live in Canada...

The seats are full, but full of passengers who aren't even covering the costs. I took 23 flights in the month of January including many cross-country flights. My total cost including taxes = $570. No friggin way the airline makes any money off of that. Way too much capacity chasing...

The product from the oilsands is ultimately a liquid, after a whole pile of processing.

Building costs are plumetting like a rock. Lumber prices have dropped by more than half since 2004, despite rampant USD$ inflation and devaluation. Plenty of cheap Mexican day labourers are available for almost nothing if you know where to find them. This bubble won't be over until it...

But there will be all these vacant houses, which will eventually revert to rentals, so that's not supportive of the rental market either. Too much capacity in the overall housing market means rents can only go one way -- down. Hmmm. I thought an abundance of new properties in the market...

BTW, the most effective way for a business to hedge against this behaviour is through debt. Of course, most American businesses have been steadily reducing debt over the past decade, and reducing the duration of their debt obligations, so they have actually amplified their vulnerability to the...

Exactly! If you bought gold in 2000 at $250/ounce, and you sold in 2008 at $1000/ounce, the tax code presumes that you actually gained something of value, and you'd be taxed on a gain of $750. Did you actually have any more gold than when you bought the coins in 2000? Of course not. But...

Okay, here's one: with such low rates of interest, there is no need to expand the money supply to pay interest. Or to pay interest on interest already accrued. Whereas, in a country with 5% interest rates, they need to continually expand the money supply to facilitate the rapidly increasing...

Wasn't there a story recently whereby the dog and cat shelters are seeing many more dogs and cats abandoned (or left behind) when homes are foreclosed upon and the previous owners flee?

Interest rates dropping? Now who's smoking the crack....

Makes sense. I suspect the entire mortgage brokering industry will dissappear (they will go the way of travel agents who were obsoleted because of online airline ticketing) as lenders will no longer want to outsource the most important part of their business to strangers.