This Housing Bubble Will End Badly, Too

The National Review reports:

If the value of your home has improved dramatically, take a momentary break from dreaming about what you’ll do with that money once you cash in and ask yourself: Why? Why is my house today worth twice as much as it was five or six years ago? It’s five or six years older, for one thing, and unless you are in possession of a charming New England stone colonial, houses are not like wine, growing better with age. Maybe home prices are up because of good ol’ supply and demand, with housing construction failing to keep up with population growth. No, that’s not it, either: Housing construction is soaring, up 26 percent since last summer; needless to say, the number of U.S. households is not up 26 percent since last summer, executive amnesty be damned.

Why?

Instead, housing prices are going up for the same reason that college tuitions are: because the government facilitates lending people money at concessionary rates to purchase them. The Fed has, despite the occasional sobering gander in the direction of reality, been keeping the cheap-money sluices pretty much wide open. The federal regulators have loosened their grip over Fannie Mae and Freddie Mac’s lending activities, and, according to a Fed report released Monday, banks are once again loosening up their lending standards. This ended badly the last time. It’ll end badly this time, too.

Thanks Federal Reserve!