One rule of thumb is that the bigger the run-up in home or stock prices, the more likely a crash. History shows that many long runs of economic growth ended in a house price bust, so the real estate market is worth especially close watching. In general, if for an extended period of time home prices grow at a faster annual rate than the economy, be on the alert. In a 2011 paper looking into potential causes of the global debt crisis, the IMF studied seventy-six cases of extreme financial distress across forty countries and found several key indicators that seem to rise before these meltdowns,
...more
