In the link Shiller says he doesn't understand the motivation for the housing bubble...
Was it new family formation, speculation, trading up...or what?
But chances are that the Greenspan ultra-easy money scheme that followed the DotCom Crash had something to do with it....
Remember, a lot of people made big money in the DotCom Bubble Daze...and many of them DID GET OUT in time...
So, they had to put their money someplace...
And real estate is the traditional place to stash money between Bull Markets in stocks... This is actually noted and written about in the market histories...
Also, Bubbles tend to come in pairs....
In other words, you'll have a stock bubble AND a real estate bubble...
It seems that the early winners always look for something else to invest in once they dump their stock... So real estate is a convenient place to store large amounts of money...during slow times in the financial markets
Finally, Greenspan was in a unique position to being able to print money with impunity; because he was printing dollars for WORLD GROWTH...NOT JUST US GROWTH...
The China Boom was so great...and the resulting "productivity" enhancements so big, inside the US when American workers were laid off...that money could be printed without consequences for the FED...
Until now...
With China overbuilt and the US asset markets overpriced...and additionally "goosed" by the subsequent Greenspan easy money regime...
The Housing Bubble was in an historical "sweet spot" that few could have seen coming.
Even now, it seems that new stores are being built...even while older stores are sitting empty... Overbuilding is real.
And the ability to trade up from a $200,000 house to a $400,000 house is now harder...since new people are not coming in at the bottom end of the price scale to keep the Ponzi Scheme going...
At some point the system just freezes up... And that point seems to be near...
