The bulls are roaring, house prices are rising, and all’s well with the world.
Or maybe not. Certainly house prices have risen — and contrary to popular opinion, I expected price rises this year, since mortgage debt has been accelerating since the beginning of 2012 (see Figure 1). One of my many economic heresies is the argument that asset prices are driven by rising debt. Rising asset prices — in this case, houses — require accelerating debt (in this case, mortgage debt), and that’s indeed what we’ve had since the beginning of 2012.