Housing Bubble

Discussion in 'Economy' started by Markainion, Jun 15, 2005.

  1. Markainion
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    Markainion Member

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    I just want to see if anyone one got a good educated guess on if or not American is currently in a housing bubble.

    Based on some data that I have collected according to the National Associate of Realtors 1 out of 3 home bought in 2004 were second homes or investor’s purchases. Twenty three percent were investor transactions bought by investors only for the purpose of making money.

    Link
    http://housingbubble.blogspot.com/2005/03/investors-second-home-buyers-are-huge_13.html


    Other data that I collected says that housing prices have increased 48% since 1999, A much higher gain than both income and population growth from the same period. Last year the national income in median housing prices increased 15.5% the largest increase since 1980. While this year housing prices have continued to surge and the median price for a house nationally is now over $200,000.

    Mean while the last report on foreclosures rate on homes in the United States says that it has jumped 57% from last year, reporting 28,000 foreclosures form March this year from 18,000 in march last year.

    Link
    http://www.wsws.org/articles/2005/jun2005/home-j13.shtml


    My question is this: My brother is getting married this September and is planning to buy a new home around this time. Does anyone think that this is a good idea? Personally I think that the United States is either close to or currently in a housing bubble. Can anyone make a counter argument against this?

    Currently the Median Housing Prices in the United States has been accelerating. The link below give a monthly chart of by how much prices have changed in the last year.

    http://www.nahb.org/generic.aspx?sectionID=131&genericContentID=3323
     
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  2. inventorthief
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    inventorthief Rookie

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    I'm 26 and I'm buying a house right now. I think it depends where you live. Do you see a lot of people buying houses in your area, or selling them. What is the condition of the area you live in? Is your area a buyers market or a sellers market. If there are more houses than jobs available, then most likely the value of those homes may go down. Even if the bubble was to snap due to massive foreclosures and bankruptcies, you could still make money. Hint, buy cheap so that if your investment falls, you can still have some equity to borrow against and find a great deal on a foreclosed home to add some income to your cash portfolio.
     
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  3. Markainion
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    Markainion Member

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    From what I have read the housing market is hot in most counties in the US right now, a few area prices in houses are declining in most area housing prices are increasing. Some areas housing prices have soured. You can look up your own area home prices and recent changes in prices fairly easily on the internet. My brother has been looking for a house for a few months now and he has seen a major increase in prices the last few months. As my data given from the original post shows.

    As for as buying a new home, it really depends on the your situation versus alternatives. You most likely will either see your home price go up dramatically the first year or two, or stay the same for a long time. Alan Greenspan made a comment on the housing market recently; all he said is housing prices rarely decline in value.
     
  4. menewa
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    menewa Member

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    If the economy dips and a lot of people start forclosing on these homes, prices will probably lower when lenders suddenly have a bunch of houses to get rid of.

    However, I don't know if the economy will start failing soon. CAFTA is in the works. Why its passage will harm the economy in the long run, it will give it a boom in the short.

    Also, investment will remain high due to the tax cuts, another thing that gives short term booms, but has the potential to temporarily cripple us in the future.

    Also, the war rages. This war in Iraq appears to be another short term boom for the economy. The constant billions pouring into defense companies will also keep the econmoy strong for a bit.

    In conclusion, the price of houses will fall, but don't hold your breath. Better to buy now. Just remember to shop wisely.
     
  5. Huckleburry
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    Huckleburry Member

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    The housing bubble is the biggest financial bubble in history. Rents and mortagages are way way out of line with the latter being much more then the former. The Economist has been publishing on this subject for the last year or so and the most recent article was the cover. My sister was thinking of buying somthing in the DC area (the hotest market in the country) and I told her to wait. Most experts are prediciting a leveling off or fall within the next two years. In the mean time your brother can use the money he saves by not paying rent to invest in other securities. Mr. Bushes new tax program will make the two nearly equivlint tax wise and the ROR (if he your brother is diciplined) will be much greater and safer if it placed in other securities. To read more about this visit The Economist's web site. Fuck all the other sites you run across. These guys are pros and they are very rarely wrong on these kinds of issues. Personally I also say...Wait.
     
  6. NoLabel
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    NoLabel Rookie

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    Like any good real estate agent will tell you, Location, Location, Location.

    One thing is certain, there is just so much land available for housing.

    While long term interest rates are remaining low, I invested in a new home four years ago, and think it was a good investment.
     
  7. rtwngAvngr
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    rtwngAvngr Guest

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    This may come true now that the SCOTUS has rendered real estate an unsecure investment.
     
  8. Annie
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    Annie Diamond Member

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    Well I'm living in an area that has been pretty high end for many years. Keep in mind that in Chicago the 'mid-range average condo' is selling for $385k:

    http://www.chicagotribune.com/business/chi-0506240097jun24,1,1701341.story

     
  9. softwaremama
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    softwaremama Member

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    Yes, lots of people turned away from the stock market to real estate to make money by rehabbing, flipping, or selling teardowns. You know the liberals hate to think of people actually making money! Sux, huh? Kind of scary to see the SCOTUS treading in jackboots on the American Dream.

    Looks like the lib activist SCOTUS judges thought they needed to put the fear o' God into everybody. Frightening day for all. Everybody needs to note who the dissenting justices are.
     
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  10. Annie
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    Annie Diamond Member

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    Yep, the libs went for big business, the conservatives for the little guy. Kinda freaks everyone out! :fifty: At this point in time, Bush must really hold to constructionists. He can afford to. Write your Congressmen/women and your leading newspapers. Make your voice heard beyond this little forum.
     

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