"There has been a raging controversy among experts over the question of is there a housing bubble. Is there a housing bubble?"
"Yes, there most definitely exists a housing bubble in many of them major metropolitan areas as well as selected non metropolitan areas. In my book, a housing bubble market is a housing market which will decline at least 20% or greater ( inflation adjusted dollars) during the course of 4 years."
"Can you please name some areas that are experiencing a housing bubble?"
"Sure. Modesto, San Francisco, Sacramento, Las Vegas, Phoenix, Boston, Seattle, Naples, Jacksonville, Miami, Hartford, Providence, Flagstaff and Philadelphia. Of course there are many other places."
"Given the increased talk of a housing bubble and Greespan's remarks, why has the housing bubble not burst yet?"
"Good question. First I would like to say that many bubble markets have already entered a period of stagnation ( stagnating home prices, building inventory). Secondly, the housing market is a slow moving vehicle, it cannot turn on a dime. But turn it will. This fall, many bubble markets will be seeing price declines. Once, the greedy investors fully realize that the boom is over the bust will come. Fear is a strong factor then greed. The housing bubble is a speculative episode and just like other speculative episodes it will end with a bust not a whimper."
"What do you think the Fed will do with short term interest rates?"
"By the end of the year short term interest rates will likely be at 4.00%. The fed is unlikely to continue and increase them higher then that because of the perilous nature of the economy."
Subscribe to:
Post Comments (Atom)
Posts
David, I live in the DC Metro area and have seen a slow-down, though not drastic. Do you have figures for DC proper in MRIS? Think NW DC will not bubble? Thanks and great blog.
ReplyDeleteNo I don't have figures. I have been tracking zipcodes around me and they are all up in the number of listings from July.
ReplyDeleteI have been saying that DC is likely to say stagnating prices this coming year. I remain unconvinced that DC is a bubble market as per my definition. The job growth in the region continues to be very strong.
DC region had 19,112 active listings on 7/1/05, and had 23,487 active listings on 9/2/05 according to ziprealty. The figure is up over 25,000 currently, so the inventory is rising quickly.
ReplyDeletethanks for the numbers. :-)
ReplyDeleteTHanks for the feedback David and anonymous (ziprealy). I've been mulling on buying a property in Shaw and I think its way overpriced. But worried that interest rates might go up. Do you guys think its generally best to wait it out for homes over $600K that are in NW DC (e.g. Shaw) or just buy now since rates are lower? I can get renters easily- its just that I might be under on my mortgage and hope waiting it out would work out better. Your thoughts? Thanks!
ReplyDeleteTo be honest, I never thought of it that way, Anonymous at 2:53 p.m. Thanks for the feedback!
ReplyDeleteI am relocating to Miami and must find a single family home in the central area. I cannot find anything decent even close to 2000 sq ft for less than $600K. I have pets, so rentals are difficult. There is very little good inventory PERIOD in the central area. I believe condos (not an option for me) WILL come down and soon but what do you see for single family or town homes?
ReplyDeleteHi Skytrekker,
ReplyDeleteI am moving from Puerto Rico. In 1998, we bought a wonderful, 2,727 sq ft townhome in the very desireable Condado area. It was in bad shape cosmetically and we got it for 20% under appraised value. We have since put a lot into it and enjoyed every second of it. Downsizing into a place that is not nice is psychologically very difficult but we must get around it. I have found a few viable rentals for us and pets and have decided to put on my logic cap and rent the least expensive one that fits the bill. I have no idea how much prices might come down in this area but I do not think they will continue to go up a the rate they have in the last year. Also, a number of properties I looked at last month are still on the market and in the case of two of them (NEW!), the price is reduced. New is desireable due to the Miami-Dade hurricane building code. Anyway, I am swallowing house lust, pride, aesthetics (very important to me) and moving into something sort of college like (for more than my current mortgage, insurance, tax and condo fee payment) because it makes economic sense. So, IS THERE HOPE? I need the moral support.