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post #1 of 13 (permalink) Old 03-23-2005, 05:45 PM Thread Starter
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Real Estate Bubble?

What do you think? It seems that RE is grossly overpriced in many areas of the country. Do you think it is in a bubble? Going to pop? What are your thoughts?

Thanks.
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post #2 of 13 (permalink) Old 03-23-2005, 06:05 PM
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RE: Real Estate Bubble?

I don't think so -- at least not in my part of the world (wishful thinking?)...

"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon
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post #3 of 13 (permalink) Old 03-23-2005, 06:30 PM
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RE: Real Estate Bubble?

yeah, I'm with G. There are many artificial elements that keep RE values in an upward trend. I don't see a universal cataclismic bubble pop happening (although I have been wrong before). There are always isolated depressions. Even those tend to be temporary. There are too many powerful entities whose interest it is to not see a nation wide RE value depression (clumsy sentance).

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post #4 of 13 (permalink) Old 03-23-2005, 06:32 PM
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RE: Real Estate Bubble?

It is called inflation, and you have not seen anything yet.
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post #5 of 13 (permalink) Old 03-23-2005, 11:07 PM
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RE: Real Estate Bubble?

Interest rates and real estate prices historically have moved inversely. Easy financing meant high demand and higher RE prices. Lower interest rates meant smaller payments and people could afford more expensive homes.

When the rates go up demand decreases and buyers are looking for cheaper houses.

There is a problem with the concept of an economic bubble. Bubble supposes that there is a solid economy underlying the bubble at some lower economic level. There is a theory that there has been a shift in the paradigm of the economy and the whole economy is a bubble and so everything based on the economy is a bubble and therefore what used to be known as a bubble no longer exists, it is now called a market. And no, you are not really supposed to understand this.
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post #6 of 13 (permalink) Old 03-24-2005, 05:25 AM
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RE: Real Estate Bubble?

Housing prices are really like a ballon filled with water. When interest rates are down, the owner can ask more for the house, and the ballon filled with all the money is pushed in his direction. When interest rates goes up, the price of the house itself must come down, pushing the value bubble to the bankers. But there is a hidden villian waiting to poke the balloon a good one - falling incomes in the US.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #7 of 13 (permalink) Old 03-24-2005, 05:49 AM
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RE: Real Estate Bubble?

I like it. It's not just interest rates. It's generous tax laws which allow you to keep capital gains without penalties and the ability to write off your mortgage interest on your tax return. It's also creative financing methods which allow less affluent people to purchase more house than they could have if they had gone the traditional route.

All hail the Sixteen Men of Tain!
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post #8 of 13 (permalink) Old 03-24-2005, 06:04 AM
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RE: Real Estate Bubble?

location location location. that is what it is all about in terms of real estate. as for the bubble popping, depends on where you live.
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post #9 of 13 (permalink) Old 03-24-2005, 06:21 AM
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RE: Real Estate Bubble?

Quote:
kuan1 - 3/24/2005 7:49 AM

I like it. It's not just interest rates. It's generous tax laws which allow you to keep capital gains without penalties and the ability to write off your mortgage interest on your tax return. It's also creative financing methods which allow less affluent people to purchase more house than they could have if they had gone the traditional route.

The alternative financing is a big help - I financed my house using what is essentially a margin loan on stocks - I have the option to pay only the interest if I choose, as long the stocks maintain their value -if the stock performs well, in the end I come out ahead in both the rise in the value of the house, and in the rise in the stock price. Since I backed it up with Exxon stock, and one of their competitors blew up yesterday, I'm doing ok with it. The only real danger is the greater risk - a margin call means I got to go live under a bridge.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #10 of 13 (permalink) Old 03-24-2005, 08:05 AM
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RE: Real Estate Bubble?

I have a bridge in death valley ca. I could sell you.

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