Consenting Adults versus Irrational Exuberance in Housing

Neil Barsky of Alson Capital Partners rubbishes the notion of a housing ‘bubble’ in the US in terms that will be very familiar to readers of this blog:

bubbles happen when prices become unhinged from intrinsic value. Homes are not stocks; their “intrinsic value” can only be in the eye of the beholder. A house has utility. Rational people might be willing to pay more for a water view, or for living close to work, or for a larger loo. Such voluntary economic decisions are neither irrational nor exuberant.