Housing bubble talk heats up to end the week
He said, she said. That's the story of the real estate bubble, nothing but contradictory data.
CNBC just finished such a segment on the housing bubble. Some say there is no bubble, some say there are tiny bubbles in the national market, others say to expect depreciation of about 20 - 30 percent in areas like California.
It all comes down to a fundamental shift - whether you believe one has occurred, or not.
If one has occurred, then it is possible that real estate prices, and housing prices, could continue their upward run for some time, especially if the economy grows more than expected. This is the position of most people within the real estate and mortgage industries.
On the other hand, academics studying historic data, compare the current U.S. real estate market to the stock market bubble and the current Japanese real estate market. Via that scenario, housing will take a real tumble.
In any event, risk does seem to be rising.
CNBC just finished such a segment on the housing bubble. Some say there is no bubble, some say there are tiny bubbles in the national market, others say to expect depreciation of about 20 - 30 percent in areas like California.
It all comes down to a fundamental shift - whether you believe one has occurred, or not.
If one has occurred, then it is possible that real estate prices, and housing prices, could continue their upward run for some time, especially if the economy grows more than expected. This is the position of most people within the real estate and mortgage industries.
On the other hand, academics studying historic data, compare the current U.S. real estate market to the stock market bubble and the current Japanese real estate market. Via that scenario, housing will take a real tumble.
In any event, risk does seem to be rising.
2 Comments:
How can you not say that risks seem not to be rising? Interest Only Loans hello....?
40% of people doing Interest Only Loans that couldn't afford houses otherwise. When these people have to start paying principle after 2-5 years their will be a lot of forclosures. Greedy crooked mortgage brokers and the average "flipper" have really driven up the market.
When the bottom of the market (1 bedroom Condos in OC going for $360K) are not affordable to over 80% of the residents then there has to be trouble.
Did the residents of California increase their personal incomes in the last 3 years this dramatically? And what about the good ole people that buy homes to actually live in and decide they want to move to a bigger house only to find out they cannot afford the property taxes.
Whoooaaaa! I think you need to reread my post. I wrote "In any event, risk does seem to be rising."
Nonetheless, look at the date of my posting, which was several months ago. Overall, real estate prices are still going up.
While you are right that only about 16% of California residents can afford to buy California real estate, there are foreign buyers that are also buying California property.
Real estate is a complicated, cyclical market. While I think that some sort of pop is inevitable, it really is anybody's guess.
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