by Calculated Risk on 9/30/2005 05:29:00 PM

Occasionally people ask me: "Can there be a bubble when so many people think there is a bubble?"

The answer is: The prevailing opinion on housing is that there is no bubble. From MarketWatch:

A survey out this week from RBC Capital Markets shows U.S. homeowners have little regard for talk of a housing bubble; nearly 60% expect that the value of their homes will increase at least 5% annually over the next several years -- not a bad guess given home prices historically have risen a percentage point or two higher than inflation every year.

But one-quarter of homeowners say they still think their houses will go up in value 10% or more a year, despite strong price hikes in most parts of the country in the last few years that economists say aren't sustainable. Only 3% of homeowners said they think their home will decline in value -- pessimists who probably fear they mistakenly jumped into homeownership.

Greenspan sees a little "froth". Others see some local bubbles, but not a national problem. Only 3% of homeowners think prices will decline.

Only a few contrarians think there is a housing bubble. If the contrarians are correct this time (and I think they are), when sentiment changes, housing prices will start to fall.