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["clanSkeen" <sgian AT planetc.com>]

But, Gene, what about the statistic that we are building one house for every 
rise in the adult population of one person (from the article)?  If that is 
true, it is certainly an oversupply of housing and hence a bubble.

Around here there is virtually NO construction of modest homes.  All the new 
construction is for very large and expensive homes.  Someone visited an 
expensive housing project just south of Knoxville (120 miles from here) and 
when they had toured a couple dozen homes, most of them occupied and for 
sale, they commented on how the poor foolish people had bought such a large 
house they could not afford to furnish it.  They had seen house after house 
with the kitchen equipped and one small bedroom and that's all.  The rest of 
the rambling McMansion was empty.  Their perception was corrected by one of 
the owners.  The people living in the houses were perfectly capable of 
furnishing them if they chose, and many of them had paid cash for the 
houses.  They were living a lifestyle where they were mostly at work, bought 
an expensive house in a rising market, and if they lived in it 18 months, 
they could sell it without paying captial gains.  Homes have replaced the 
stockmarket for many as an arena of speculation.

That along with another article I read:

http://story.news.yahoo.com/news?tmpl=story&ncid=1204&e=4&u=/nm/20041208/bs_nm/financial_nasd_homeequity_dc&sid=95616122

which tells how values of homes are inflated because people are borrowing 
the equity and playing the stock market with it, together they emphasize 
that homes are not just being assessed for their value as housing, but 
there's  speculation component to it as well.

You may be right, time will tell.  But the logic that things have gone a 
certain way for a long time and so needs must continue that same way does 
not hold.  You can always get another beer out of the biggest barrel, right 
until the time you can't get any more beer from it.  There was just that 
sort of logic afoot in the mid 90's during the rise of the tech stocks.  The 
thinking was that technology was here to stay, it would only increase, so 
how could money be safer than to invest it in technology?  And they were 
right, techonoly is still with us, even more than ever, and yet poeple lost 
their shirts on that logic.   Now they are losing their jobs over it.

As I said, you may be right, but it might be whistling past the graveyard.


James