I realize this is extremely anecdotal evidence, but since real estate is driven by human emotions I believe it is applicable to my "bubble" thesis. In a prescient move, the Chief Economist of the Mortgage Bankers Association, Douglas Duncan, commented this week that he is selling his home in Washington DC, which has tripled in value in the last twelve years, and is going to rent. Duncan expects, "significant reversals" in regions that have enjoyed strong home price appreciation, including Washington, D.C., Florida and California. If home prices in DC tripling over the past dozen years is disconcerting, than California prices tripling in the last 6 years must by nauseating.
This story brings to mind an axiom that my portfolio management professor gave me: "In every transaction there are three people, a seller, a buyer, and a broker, but only one of them is guaranteed to make money." It is because brokers are guaranteed to make money that they are constant cheerleaders, pushing markets higher and lower, but always demanding more transactions. So it particularly auspicious that the chief economist for the Mortgage Brokers Association is raising the red flag on this out of control market. A person whose principal job is to encourage mortgage transactions sees the market as so wreckless that his ethics and humanity (but more likely desire for self preservation) are overwhelming his role as mortgage lending cheerleader. If the the chief economist for the National Association of Realtors, announces that he sold his house because the market is overheated, than head for the hills because a tidal wave will imminently strike the housing market.