A reader comments on the Matusik post from earlier this week:
"I think the report misses some important trends, there are also quite a few factual errors.
For one, not ALL US houses mortgages are non-recourse, only a few states including California. MOST US houses mortgages are recourse. The biggest difference between the US and Australia is the commodity boom, but how long will that last?
Second, all the 0-down, interest-only mortgages are mushrooming in Australia as well. Australia also has stated-income loans which is no different from the US.
Second, he entirely misses the point of what commodity boom does to evolution of cities. If he concedes that the commodity (particularly energy) boom will go on for years, which argues for a booming property market, then it is the inner cities or places with good public transportation will benefit. However, he was presenting a sprawling suburban future that is completely impossible with oil price heading for the sky. He predicts that people will start commuting from Blue Mountains, it is just not going to happen if gas price is on the current track.
He is also completely off the mark in predicting a mild US recession. Many financial heavy weights including Warren Buffet, Jim Rogers, George Soros etc have come out to say that this is going to be the worst recession since the Great Depression, which is a euphemism of saying Great Depression Episode II.
The funniest of all is, if he thinks everything is rosy, US will recover in 2009, and Australia's commodity boom will go on forever, why will interest rate FALL in 2009? Shouldn't interest rate fall because the economy is NOT doing so well???
I can understand that Matusik is always arguing that property can only go up up up because he is sponsored by real estate developers, but this report just looks way to biased, to the extent that he cannot even get facts right."