Is the Real Estate Bubble Bursting?

[smurphy]

Having talked to some people paying attention and reading reports like this, it would appear as if the bubble burst is underway.

http://news.yahoo.com/s/thenation/20051005/cm_thenation/20051024real_estate_bubble

Anybody in real estate have an opinion?

 

[wcb4]

nation-wide, my answer would be no. however, there are some areas that have cause for concern. to those who are looking for opportunities in new areas, i would take a long look at the denver area. if anyone would like more info, i'm more than happy to provide it.

 

[Mjolnir]

out here in so cal prices keep going up. was listening to talk radio they have a couple of seasond realtors & finance guys. they said as long as there is demand prices will continue going up. it might slow down because of pricing people out of the market, but they thought that was down the road. i'm fairly new to being a realtor, and i am a home owner with a painful mortgage payment, i have been seriously thinking about selling and using that money to market myself & have a comfortable cushion for whatever. i just hate to rent.
wcb4, if you have info re: so cal, i would greatly appreciate it. i live in an area called hacienda heights. i dont want to lose the equity i have gotten.

 

[ScreaminPain]

So. California real estate is continuing to florish. Condo's are selling for over $500,000 and being sold in less than a week.

My neighbors sold in 4 hours for $12,000 over asking price last June. Since then (4 months) the prices have gone up another $50,000.

There is too much demand here for prices to go down much, but they will undoubtedly taper off at some point.

It seems that each area of the country has a unique saturation point that affects sales. Home value will fluctuate depending on location.

 

[s_dooley24]

I think the real estate market is being compared too much to the stock market. The bubble in the tech market and other areas of the stock market obviously did burst, with stocks sharply declining. However, I see the real estate market maybe deflating some, but not bursting. Just because people lose some equity in their house they don't call up their realtor at the drop of a dime and say I want out. On the other hand, alot of people did/would call up their brokers and say I want out of the Nasdaq or whatever specific stock. This has alot to do with investor pyschology and some other things. Another reason I believe you cant compare the two is the transparency of prices. In the stock market the prices are pretty transparent, while in the real estate market you have way larger spreads. I do believe the real estate market is over-priced and will plateau and slip some, but I think it is a common misconception for people to compare the two markets as if they were interchangeable.

 

[bear]

I just retired........Have some property.......Looking to simplify things.........have equity that can ensure comfortable retirement years........have a brother who just did the same..(downsize) simplify.......and I'm at the head of the class of 60 to 70 million baby boomers who are beginning to think like this......demand is not necessarily growing because of 1st time buyers but from flippers and speculators in hot markets (jmho). Many are now priced out..
It's almost like ...if you have been in it you are a winner ...if not ...you better have a big income. Well, there are going to be a lot of sellers (bigger homes) in the next 10 years...creating demand for smaller homes...less land...many amenities...
Demographics will be...already are... changed. Markets will probably not be universally up or down ....but will depend on location, taxes, size, upkeep etc. Probably something like most of the Northeast down, Southeast and southwest up...etc. .....????

bear

 

[DOGS THAT BARK]

Never seen so many tv ads for 2nd morgages to pay off debt--Think direct link to low interest rates and market boom with many over extended. Once rates go back up those with adjustable rates will be SOL and will be glut of upper middle class homes on markey and cash will be king.

Young ones need to heed wise old bear and lock in rates--build equity (not borrowing power) and come retirement time kick back and be thankful you did.

 

[Theismann]

Very good advice Dogs that Bark!!

 

[LUX]

nation-wide, my answer would be no. however, there are some areas that have cause for concern.

:iagree: I think the Northeast, California, and Florida will be the first markets to see a correction. Atlanta is still very hot for investing and is currently averaging around 3000 foreclosures per month.

 

[dawgball]

Exact sentiments from DTB here. The market bubble is not being created by higher demand due to more people, etc. It is being created because lenders are widening theri spectrum of "qualified" buyers. And even the legitimately qualified are being over-extended by gimmick lending programs. As DTB pointed out, once these ARMs start coming to a head and the owners are possibly looking at a 9% loan (pulling a number out of the air but it's been MUCH higher), then they are gonig to be immediately house poor and unable to stay in that house. I really think in the next 2-4 years, there is going to be HUGE opportunities in the middle to upper-middle class demographic of homes available on the cheap.

Areas such as Mjolnir referred to are probably much less susceptible due to the affluency and churn of people coming in and out of certain areas (usually advancing metro areas). Also areas that simply don't have room to expand (i.e. NYC) there will always be a rise in price cue to simple supply and demand.

I debated selling our house in the past 6 months to sit on the sideline in a rental property for the next few years. We have about 35% equity built up in our home in just a year, so we could sit on that cash or buy a smaller house to hold as an investment property later. But we decided to sit tight because we really like the area that we live in, and our house works well with me working from home and my wife staying at home with our son.

These, of course, are just my opinion and it is based on the 7-8 RE investing books that I have read. I am, by far, not a person that needs to be listened to. I just like to talk.

 

[dawgball]

Atlanta is still very hot for investing and is currently averaging around 3000 foreclosures per month.

My wife and I flipped a condo in Atlanta (Buckhead) almost two years ago where we put 20% down, lived there for two years, and sold it for just over 30% gain which was nice. But that area is now completely saturated and several friends of mine are stuck with condos that they can't get rid of. I, personally, think that Buckhead is going to be a huge winner over the next 4-5 years as they clean it up and get a better clientele (sp?) of businesses in there.

 

[AR182]

in the valley it's taking a little longer for a house sell.....but prices are still going up...only at a slower rate thasn before.

 

[Mjolnir]

thanks for sharing all the knowledge, appreciate it.

 

[kneifl]

I work in the Real Estate business in Washington DC. While the market has slowed a bit the last few months I don't think it will be declining or going up through the roof anytime soon. Agree with a lot of what DTB said, I think he hit the nail on the head with building equity in your home and locking into an interest rate. Very good points.

kneifl

 

[Terryray]

Some areas, especially coastal properties, no bubble at all!

In Malibu a mobile home recently sold for over million dollars (that doesn't include the land it sits on!).


Suppy and Demand....There is only so much of this desirable property and the big bulge of baby boomers are moving into this area now---as they enjoy the largest transfer of generation-to-generation wealth in world history.