The AirBnB Bubble Popping Will Pop the Housing Bubble

August 28, 2023

by Charles Hugh Smith Of Two Minds

This is how bubbles collapse: the “vital few” 4% sell at whatever the market will bear, pushing prices down, and the 64% awaken to the rapidly narrowing window for locking in bubble capital gains.

Here’s how we can tell if a speculative bubble is a bubble: everyone says it isn’t a bubble–the market has reached a “permanently high plateau” because valuations are now fairly priced, etc.

Housing globally is in a bubble (See chart below) which we’re constantly assured isn’t a bubble. As I discussed yesterday (The Problem Isn’t a Housing Shortage, It’s the Concentration of Ownership by the Wealthy), this bubble is fundamentally an artifact of central bank and government policies that enrich the already-rich, who were incentivized to outbid each other with low-cost credit to snap up “investment properties” with their “surplus capital” that generate more income and capital gains that cash, which until recently was “trash” due to near-zero savings yields.