We've Seen This Before

Forbes Online had a recent article titled Wall Street's Fate Caught Up With Housing that, among other things, noted the eerie similarities between the current real estate bubble and the dot bomb bubble of the late 90s.

While oil prices, rate hikes and the dollar dominate most U.S. headlines, we believe the greater risks lie in when and how this housing boom cools. ... Can the Fed negotiate a soft landing for real estate, or will their ongoing tightening prick a bubble and cause a hard crash in housing prices? ... Unfortunately, parabolic rises do not come down gently. And if our Bellwether Index for the housing bubble comes down hard, then so will the housing sector itself. We don’t think housing prices will tumble, but they will likely experience the first nationwide decline since the 1930s. More dangerous will be the unwinding of the excess leverage and collapse in psychology. The loss of confidence alone could send the U.S. into the next recession.

The article also includes a graph showing Forbes's Housing Bubble Bellweather Index's growth from 2000-2005 alongside the Internet Index from 1995-2000. Hrm, I think I see some faint similarity between the two..... and we all know how the Internet stocks played out at the start of this century!