The Vig

As usual, the Irvine Housing Blog distills the zeitgeist.

Do you see the mentality at work here? All someone had to do was buy some real estate, improve it if they wanted to, wait a short time and sell it for a huge profit. The prices paid do not matter as long as the greater fool comes along with access to enough money to buy them out. I would not be too surprised if someone would pay this stupid price if a lender enabled them to. The bulls are all lamenting the tightening of credit because they know this is the only thing preventing the greater fool from bidding up prices even higher. After watching The Great Housing Bubble, I have become convinced there is no concept of value in the general public. There is no price that is considered too high as long as prices are rising.

Not to worry though, it couldn’t possibly happen here.