That question is a bit metaphorical and facetious, but also arises from a few observations.
First , many stories have appeared in the past few months about vacant, foreclosed houses in many weak real estate markets. The sun & surf locations are worst hit: CA, FL, AZ and NV. Someone once lived in those homes or they were second homes, or perhaps, bought by speculators relying on the "greater fool theory" for a profit.
Did people in those homes move elsewhere or are they renting or something else ?
Second, today's WSJ has this story: "Apartment vacancies hit their highest point since 1986, surging in cities from Raleigh, N.C., to Tacoma, Wash., as rising unemployment continued to chip away at demand during the traditionally strong summer rental months. The U.S. vacancy rate reached 7.8%, a 23-year high, according to Reis Inc., a New York real-estate research firm that tracks vacancies and rents in the top 79 U.S. markets. The rate is expected to climb further in the fall and winter, when rental demand is weaker, pushing vacancies to the highest levels since Reis began its count in 1980."
That rules out the people moving to rental apartments.
So where are they ? Or did they never exist ? Were they virtual people ? Has the US population fallen ? Did lots of young people move back to their parents homes ?
To me, analyzing the home real estate bubble requires one to explain these facts and relationships.
We know the US population has not gone down. The growth rate may have fallen a lot, though, as illegal immigration is reported to be much lower due to to the weak employment market. There are also reports of illegal immigrants going home - even after many years here. That's no problem for me - but it would be interesting if some of the US real estate bubble was fueled by them - or not. I suspect they had little direct impact on home demand; indirect, knock-on demand is possible, though. Prices are determined on the margin. I don't know if it's a coincidence that the housing market boomed when the US was being overrun by illegal immigrants and cooled off and collapsed as fences were being built and tighter job rules were being imposed.
The panic of 2008 also caused serious retirement fund losses, so many retirees and near retirees probably ceased to desire a second home in the sun & surf area, or dropped plans to move there. And overextended retirees perhaps sold. That eliminates many "virtual people".
Speculators also are mostly crushed now, too. That eliminates more "virtual people".
What does this mean ? House prices won't recover to the prior highs for many years. This is the real estate cycle, which happened around 1981 and 1988-1990 periods. I remember in the last cycle, it took about ten years for my home to reach its prior high valuation (based on true neighborhood sale prices).
The market needs real people to replace all those virtual people. I say, a bit facetiously, what this nation needs is a new baby boom - a new cycle of increased household formation !
Young men - get married ! Young women - get married !
To quote that great song performed by Eddie Cantor in 1931, "Now's the Time to Fall in Love":
"Potatoes are cheaper, tomatoes are cheaper
Now's the time to fall in love
Why, the butcher, the baker, the old candlestick maker
Gave their price a downward shove
Grab yourself someone to fry your eggs and bacon
She can live just like a queen on what you're makin'
You'll find in some kind o' trouble
You're better off double
Now's the time to fall in love"
Word of the Day
"Ephemeral" - adjective [$10] an old one from the card file *
Ephemeral means lasting only a very short time.
Sentence: Will Obama's popularity be ephemeral ? Perhaps, since it seems based on emotions and hopes of people, not on any real actions or substance. Talk is cheap and eventually homo boobus will realize that. Obama needs to do, not talk. Acta non verba. [actions, not words]
To forestall flack, a $10 word is one that that I once had to look up in a dictionary, not knowing its meaning or just being unable to articulate that meaning clearly at that time. This word card is written in my handwriting of probably 40 years ago. That I now know its meaning does not reduce the value of the word.