There are a huge number of bubble markets across the USA. What is a bubble market?
A bubble market is any area where residential real estate prices will decline more then 20% in real dollars [inflation adjusted] over the course of 3 years. In most bubble markets, the peak price was reached in June, July or August of 2005.
Many bubble markets will experience real price declines much greater then 20%. Some may experience price declines of 60% in real dollars over the next 3 years. Of course some markets may keep on declining for more then 3 years.
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"It some areas however a decline of 30% or more is highly likely."
ReplyDeleteI agree. Bakersfield, is likely to price declines of between 45% - 65% in real dollars over the next 3 years.
In defining a bubble, it may be useful to compare the costs of renting to the costs of owning.
ReplyDeleteIn Silver Spring, MD, the costs of renting my apartment have risen about 50% since 1999. The cost of buying a house have risen about 2-300%, and a condo even more than that, over the same period. Those kinds of discrepancies make me pretty sure we are in a bubble here.