Monday, May 08, 2006

What? recently published an article entitled “Why The Housing Bubble Won’t Burst” in which a purported veteran analyst Michael Youngblood of Friedman Billings Ramsey & Co. (FBR), an investment banking firm specializing in non-conforming residential housing mortgages, provided supposedly sound reasons for one to be optimistic about the current state of the real estate market.

Youngblood argues that the housing bubble argument is overblown because, in his words, “there is no national housing market, so there can’t be a national house-price bubble.”

Wow!! I never thought about it that way…. What a great counter argument!! There’s no way for there be a real estate bubble because there is no national housing market. Ok so we can all sleep easy, as it seems a technicality of the definition of the term “housing bubble” has prohibited its possible existence. We can all go out and spend spend spend on those Jumbo loans Youngblood’s firm handles.

Youngblood goes on to say “However, there are bubbles in 75 of the 379 markets I studied.”

Well that’s better. Lets all be optimistic as there is no national housing bubble, only 19% of the nation is experiencing housing bubbles. Certainly that’s something to feel very secure about as I’m sure that this 19% doesn’t include any areas that could have an greator impact on the economy.

When asked where those bubbles are, Youngblood replied “Most of the bubbles exist on the East and West coasts in such markets as New York, Los Angeles, Washington, Phoenix, Honolulu, and Tacoma Wash.

Ok... so I guess where not out of the woods just yet.

More interestingly, Youngblood sees certain areas of California and Florida as showing signs of being poised for even greater gains in 2006. Strangely though, when asked why these areas would do so well Youngblood responded “Bubbles can persist for very long periods of time…”

Ok, so the areas that aren’t bubbles actually are bubbles?

Youngblood finishes up this travesty by recommending people invest in homebuilding stocks as “the homebuilder stocks may continue to perform well for a while longer.”

Huh?? Last I checked, the whole homebuilding sector led by names like Toll Brothers (TOL) and Hovnanian Enterprises (HOV) was down like 30% year to date. What an analyst! Thanks Youngblood!

Is this a serious article? How does something like this pass muster at a legitimate media source such as BusinessWeek?