Today’s Housing Bubble Post

In Real Estate Fever, More Signs of Sickness,

But now the question comes up more and more: How long can this last?
“It feels like we’re on the tip of the razor blade right now,” said real estate agent Eric Stewart at Llewellyn Realtors in Rockville. “And we can’t remain at the edge of this blade very long.”

It will be a hard fall — when it happens.

4 thoughts on “Today’s Housing Bubble Post

  1. Good question, Dave! And one has to love David A. Lereah’s quote in the WashPo article: “There is no national housing bubble.” Seeing he is the chief economist for the National Association of Realtors he would HAVE to say this of course!
    Again the parallels between the situation in the US and Australia are obvious ..

  2. Nonetheless, Jennifer Tyler isn’t worried. She just took out a 10-year, interest-only loan to keep the monthly payments affordable on her new Capitol Hill house.
    “Anything can happen in 10 years,” she said. “I can move, I can re-finance.” She said that her interest-only mortgage, where no principal is paid for the entire 10 years — and thus she builds no equity unless the house value increases — saved her about $200 a month and made the difference between buying and not buying.
    “Anyway,” she said, “the house will almost certainly appreciate, too.”

    I was talking to someone from Santa Cruz in my old neighborhood the other day – she was telling me that a house that five years ago was going for 350K is now on the market for 800K. The housing market in Santa Cruz is insane. Who can afford to live in Santa Cruz these days?

  3. I have a hard time believing that there are people taking 10-year interest-only mortgages just to get into a starter home. At the rate things are going it would only make sense that the pool of buyers is going to shrink. For someone living in a hot housing market the rise in prices is anywhere from 5x to 8x average wage growth. I don’t see how that is a sustainable market.

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