Is There a Bubble In The Housing Market?

Everyone seems to be a bubble caller these days since so many of us lived through the housing crash in 2008.  I feel that Jared Dillian, Editor of The 10th Man, explained it better than anything I have ever read:

A bubble is a psychological phenomenon that occurs when an asset class becomes overvalued and is accompanied by an obsession or preoccupation with that asset class. For example, you probably heard that the Dow just hit 20,000. It is not a bubble. Nobody is obsessed or preoccupied with the stock market. You don’t have Coast Guard guys day-trading it like when I was still in the service in 1999. That was a bubble. In fact, nobody really gives a crap about today’s stock market. Usually they have CNBC on in the locker room at my gym. Nobody pays any attention to it.

By that standard, there are very few bubbles in the world right now. But there is a bull market in people running around calling everything a bubble. Please ignore those people. The only real, honest-to-goodness asset price bubbles out there are in residential real estate in Canada, Australia, and Sweden. They are going to end up in the landfill in New Mexico with all the Atari E.T. cartridges.

The Great Recession was a time period where we lent money to anyone with 0% down.  That is not what is going on today. We are verifying more than is needed at times.