Friday, March 25, 2005

Day trading in real estate suggests bubble

New York, NY, Mar. 25 (UPI) -- Ballooning real estate values in the United States have engaged economists in a debate over whether the industry is headed for a dot-com-style bust.

In Naples, Fla., for example, some houses have been bought twice in a single day, and nationwide new home sales reached a four-year high, the New York Times reported Friday.

For some analysts it is all reminiscent of the dot-com boom of the 1990s.

"We're going through something very similar in real estate that we did with stocks," said Robert J. Shiller, a professor of economics at Yale, whose "Irrational Exuberance" book predicted the demise of tech stocks.

A new edition of Shiller's book will be published next month and promises an "analysis of the worldwide real estate bubble and its aftermath."

Phooey, say others.

"I just don't think we have what it takes to prick the bubble," said Diane C. Swonk, chief economist at Mesirow Financial in Chicago, who was an optimist during the '90s. "I don't think prices are going to fall, and I don't think they're even going to be flat."

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