This graph – again from Bill McBride – shows us how in general terms housing is close to a criticality.

You can see that price-to-rent is approaching multi-decade lows. However, 30 year real interest rates are also near mulit-decade lows.

If housing were homogenous and there weren’t significant and idiosyncratic transactions costs involved in renting out single family units, you would see a genuine criticality. One month there would be lots of “excess supply” then it would cross a line and boom within-in days it would all be sold to investors.

The gritty nature of housing, renting and the loan market means that this can’t happen. But, you can none-the-less have a very rapid acceleration where it seems like nothing is happening and then all of a sudden everything is happening at once.