Barron's columnist Alan Abelson notes that the ratio of housing prices to median US income has risen from 2.25 in 1970 to a record 3.35 today which places US home prices well into the bubble category. The housing bust of the 80's produced a ratio of just over 3.1 well below todays' inflated prices. The difference may seem reasonable in view of today's extraordinarily low mortgage rates, but as rates go up, sellers and those with ARM's will be squeezed.
The same column notes several other supporting clues.
"Our reader, a Miami resident, sent along a piece in a local business paper, the Daily Business Review, laying out in neat detail that, as he put it, the chief operating officer "talks like a bull but walks like a bear." Although said officer and his executive cohorts were brimming over with optimism in a conference call with analysts in mid-December, that didn't prevent him from selling 98,156 shares of Lennar common less than a month later. At $54-$55 a share, he pocketed more than $5 million. (He still owns 60,000 restricted shares and another nearly 71,000 through trusts.)
Insiders may have all kinds of good reasons for selling. But, as we've said before, anticipation that the stock will go up is not one of them."
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