The Wall Street Journal reports that speculation on housing by house-flippers is down, and the writers seem to treat that as a bad sign for housing.

Small-time investors who flooded into real estate in the past decade to take advantage of low borrowing costs and rising home values are starting to cut back.  The moves indicate that the market's short-term risk-takers see limited upside – and possible turbulence – ahead.

I believe that it is actually an excellent thing when speculative bubbles get gradually deflated.  If the speculative bubbles deflate naturally and gradually, there is much less risk of a recession or worse.  The more speculators who get into the market for anything, the worse it is for the public who would like to buy a house without chasing the market.

Whenever prices of anything go up faster than incomes, the risk increases of collapse.  That is what caused the economic collapse in 2008.  What is happening in San Francisco is terrible for the long-term economic health of the city.

Nearly every street in San Francisco could be called "millionaires' row."

When you price the lower-, middle-, and upper-middle-income people out of the market, eventually, there will be huge problems, which will not be solved by government aid or a higher minimum wage.  Every large city needs people working all sorts of jobs that are not paid like the high-tech companies, and the farther they have to move away to get affordable housing, the bigger the problem will eventually become and the more likely it is that people will move to more affordable areas..

It is also good that the FAANG (Facebook, Apple, Amazon, Netflix, Google) stocks are coming down to more reasonable prices.  The Price/Earnings (P/E) ratio is getting closer to reality for a lot of stocks that got ahead of themselves.

As Apple was declining rapidly in the past few weeks, Goldman Sachs lowered its target price twice in one week.  Doesn't that show that the price targets thrown out by analysts are just wild guesses or made up numbers?  Back in 2008, Goldman said crude oil would go to $200.  That was so close.  Then, as the price was collapsing, the prognosticators just continually moved their target price down until they got it right.  All of us can do that without being paid huge amounts of money.

Speculation is almost always bad.  Thank goodness we have a president who understands that helping the private sector through reduced regulations and lower taxes is the way to help the long-term economy, not through speculation or government control and power.

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