Brownie Bubble

I always thought it was apple pie, but maybe that's just a regional thing.

From the Philly Inquirer:

What would a housing recession mean?

Mmmm... smell the brownies?

They're gooey, chocolaty - and they carry the unmistakable whiff of economic trouble.

All across America, that warm, inviting aroma of homes-for-sale is filling the air.

Of course, it's one of the oldest tricks in every real estate broker's book. Stick a plate of brownies in the oven just before the prospective buyers show up, hoping the olfactory rush will make them reach for their checkbooks.

If the data out this week are any kind of indicator, boxes of instant brownie mix should be flying off supermarket shelves for at least the rest of this year. And unless they do the trick, it looks as if the first big housing boom of the new millennium is finally over.
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There's a term for what this looks like, but until now, few forecasters were willing to utter it. No longer: "We have what could be called a housing recession," Wall Street economist James O'Sullivan told Bloomberg News yesterday.
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Certainly the passing of the bubble, if that's what it is, will be felt: Housing and all its related activities (construction, sales, financing, etc.) have accounted for something like a third of all the jobs added in the United States since 2001.

Even beyond job creation, rising home prices have stimulated consumer spending. People feel richer when they think their house is gaining value. And thanks to an explosion of easy-credit financing, it's been a snap for consumers to use their homes as cash machines, using home-equity loans to pay for everything from college tuition to holiday gifts.
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Soaring house prices are much more ephemeral. Yes, the boom brought needed residential investment to cities such as Philadelphia, but it's still unclear how that will produce better long-term growth.
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Better prepare yourself - but have another brownie first.