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The Housing Bubble Has Finally Burst
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Its about time. Every major news paper including the WSJ this week featured front page article's announcing the housing bubble has popped. Sure home prices are still sky high but something definitely changed in the last few months and the supply is quickly increasing. When everyone becomes a housing expert (think day traders of the internet bubble) or when everyone tells you that that real estate is limited and will never go down, fine, but the population didn't quadruple in the last 8 years to warrant home prices to quadruple. Everyone wins if the bubble burst, even those who will unfortunately experience short term loss. If the everyday american can no longer buy a home or is forced to live 100 miles outside of the city to afford a home then we are all doomed. If I learned one thing watching the internet bubble it was the fact that when it burst it went fast, I mean really fast. I also learned that right when the best of experts finally gives in and says that the bubble is justified, that's when everything finally pops. One more thing, has anyone noticed that when ever you read an article about whether the bubble will burts it always has quotes from leading experts who just happen to be either real estate brokers or home builders. C'mon, they're not going to say that its going to burst, why would they.
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Posted by:
Anonymous
(Posted 8/27/06)
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Responses (5)
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Anonymous
(8/31):
People have been buying their houses at stupidly ridiculously high prices that they can only afford if everything is working perfectly in their financial lives. As soon as either the husband or wife loses their job, or some unexpected financial burden is placed on them they are unable to pay the mortgage. The bank then sells the house at whatever it can get. The new house buyers are the oil that keeps the process going, now that they cannot afford to buy the foreclosed house because the prices are too high, the price of the house has to drop.
Unfortunately people lose jobs and unexpected financial burdens appear, without any financial wiggle room the foreclosure rate is climbing. I heard that in Massachusetts there is one foreclosure for every six houses on the market, which, supposedly is double what it was last year.
I expect the market will be slowly dropping for some time. There maybe a couple of quick short slides followed by no growth periods, but there won’t be a bubble bursting like there was at the end of the 80s and certainly not like the stock market.
Good luck.
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carderock
(10/8):
True, the "bubble has burst" on housing. More bubbles will be bursting soon if the author of "The Long Emergency" is correct, notably our purchasing power at strip malls and Wall Mart will finally erode to zilch when the price of oil dictates a lifestyle that keeps us off the highways and shopping pursuits. Hoorah! We'll just have to sit down and read a book for a change by the glow of candles, and don't forget to power down the laptop when we have only enough money for 25 hours of electricity a week.
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07investing
(5/5):
www.reiconferences.com
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Anonymous
(7/31):
keithscatch - you're exactly right. but these are the areas mentioned in the orig posting, the areas in rural parts of the state - very far commutes from work/play in the "city" or "suburbs".
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brian629
(10/2):
It definitely has to crash. Something is wrong when someone like me in their mid-20's that is college educated and making $60K/yr cannot afford even a SMALL condo in the city. While it sucks for the economy that a recession is inevitable, the housing boom was completely unprecedented and unfounded. Every article I have read that states the bubble isn't going to burst has been written by the viewpoint of someone usually in the real estate business. Its about time reality comes back to the housing market.
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Responses (2)
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Anonymous
(4/11):
Real estate is such a local market that a bubble in one area may burst when there is not even a bubble somewhere else. Florida, along with cheap land places like Arizona and Las Vegas appreciated so quickly, that they built their own bubble and yes it did burst. But places like the Northwest and some in the midwest are still climbing, not as fast but still going up. Places with a really healthy economy and lack of land to build on contribute to this. If the prices are so high, the only reason they are that high are because someone can buy at that price, and until no one does, they are going to stay high. I am however glad that the sub-prime loans to people who should not be buying a home to begin with are disapearing. Back to the main point. Look at the bubble on a location by location basis, because there is no national market, nor national bubble, so national articles are woefully general and really do not amount to much in the grand scheme of things.
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keithscatch
(5/24):
Disagree as each area has it's own ups and downs. Florida still has increasing land and real estate prices.
Check out www.mortgageledger.com for more mortgage related articles.
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