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]


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

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

    Eric the Read

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