Affordable homes and the Real Estate Bubble

As each month passes, homes in California become less and less affordable for more and more people. At some point this will have to slow, stop or reverse. With more than half of the Nation's 25 most expensive areas in-state according to most studies, California is bubble talk central.

While the market has shown signs of cooling, it is still defying experts. In terms of real estate, we live in very risky and very unpredictable times. Even those experts that believe there is a big real estate bubble, acknowledge that a pop might be years away.

Essentially all real estate analysts believe that rising mortgage rates will help cool the market, yet rates on 30-year fixed mortgages seem unwilling to rise much higher.

Last week, watching MadMoney on CNBC, Jim Cramer stated that he believed that the Fed "blinked" because the downgrade of GM and Ford to junk bond status would prevent the Fed from taking too much more action.

While the Fed's actions do not directly affect mortgage rates, they do provide some direction. If the Fed stops raising rates, historically-low 30 year mortgage rates might hang around much longer than anticipated.

What happens then? The Southern California real estate debate continues.