Global Real Estate Bubble Is Now More Overvalued Than In 2006: US Federal Reserve

Global real estate prices are reaching a level of overvaluation not seen in three decades. US Federal Reserve Bank of Dallas (the Fed) data shows the house price to income ratio pushed significantly higher last year. The ratio, a fundamental valuation indicator, shows that global house prices to incomes have now blown past the peak during the 2006 global bubble. Markets are now facing the most extreme gap since the early 90s. 

House Price-To-Income Ratio 

The house price-to-income ratio is a fundamental indicator for home prices. It’s as straightforward as it sounds, it’s the ratio of house prices to disposable income. By itself, it doesn’t mean much, but over time it displays the historical context of the two. A rising ratio shows home prices are growing faster than incomes, usually due to excess credit. Falling ratios mean incomes are doing better than home prices, sometimes…