Thursday, April 06, 2006

Bubble Market Defined

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% or more in real dollars [inflation adjusted] over the course of 3 years. In most bubble markets, the peak price was reached in late summer 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 course of 3 years. As learned from real estate history, some bubble markets may keep on declining for more then 3 years.

[This is a slightly revised post which was posted back on Nov 26, 2005]

3 comments:

  1. It's amazing that we still have to define what a bubble is. There are a lot of ways of defining it, and we are in a bubble according to all of the definitions I have seen..

    The other way I define a bubble is people paying prices based on expectations of future value.

    -X

    bubbletrack.blogspot.com

    ReplyDelete
  2. There is a great chart of rising DC housing inventory over at:

    http://overpriceddc.blogspot.com

    However, while inventory is up, prices are if anything rising. Any views why?

    Eric the Read

    ReplyDelete
  3. David! I think I've figured it out! Soda causes bubbles. :)

    ReplyDelete