Housing (Ad) Bubble

There’s lots to say about the current real estate price bubble*, but I hadn’t considered the boon to publishers. Not online anyway. I have noticed that advertising in Silicon Valley free papers is dominated by real estate for sale. The “Got Ads?” blog says that “mortgage re-financing ads comprise at least 20% of ad volume in total dollars” and guesses that at least 35% of Google’s and Yahoo’s recent quarterly profits were directly from mortgage ads. I assume that “ad volume” above refers to pay per click ad volume. I’d like to know the source of the 20% share and logic of the 35% estimate above.

Is potential loss of mortgage ad related profits priced into Google and Yahoo shares? I don’t want to bet on that.

Unfortunately promised direct real estate price hedges appear to have not launched (Robert Shiller’s Macro Markets) or have not reached the point of usefulness (HedgeStreet’s real estate price Hedgelets are still very thinly traded and only go out six months, a slight improvement over one quarter as of the beginning of this year. (Another complaint about HedgeStreet and to a lesser extent TradeSports: lack of easily linkable URLs for contracts. C’mon, it’s the web, get with the program!)

* I believe that we’re in a real estate bubble and that prices will decline over the next several years. However, I’ve considered housing overvalued since 2001 and stocks since 1996. Are my animal spirits a leading indicator, or just a spurious indicator?

5 Responses

  1. bw says:

    Mike! there is a great housing bubble blog out there is Ben Jones’

    like you, he is a great interview.. I hope to use it soon

  2. Ben! that’s the first link in my post.

    You give Jones faint praise indeed.

  3. […] As I’ve mentioned previously I think the real estate market is in a price bubble. I tend to have more respect for people who thought stocks had reached a permanently high plateau in 2000 (and could only rise from there) than I have for people who now think similarly about real estate. The former could at least point out a fundamental change in the economy–the internet–that one could at least imagine as a mechanism for permanently shifting returns. From the latter I’ve never heard a putative fundamental change–they weren’t building new land ten years ago, either, and there have been periods of low interest rates before. […]

  4. […] Housing (Ad) Bubble. Distressed sales still needed to be advertised. (Pointers to data on how this actually turned out would be appreciated.) […]

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