Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I suppose I'm sort of mashing two questions together, national or regional or local bubble and local overpricing. Maybe I'm not using bubble correctly, maybe I mean overpriced. Or the top of a cycle. Some of this is just semantics. Buy too high and when the market corrects you are stuck if you need to sell. That's what I'm worried about and that's one of the things I don't think realtors want to tell you. I would hope a realtor who had been working the same market for 20 years would be able to tell if the markt was overheated and price was too high and bound to come down again.
Buy a forever house that you can't afford and you won't have to worry about a bubble.
Buy a home with a soaker tub and take a bubble bath.
I believe that there's a nationwide bubble that's been puffed up by low interest rates. If rates creep up and incomes stagnate, prices in most brackets will simply have to fall.
Locally of course - it depends on the local supply of housing and state of the economy.
I suppose I'm sort of mashing two questions together, national or regional or local bubble and local overpricing. Maybe I'm not using bubble correctly, maybe I mean overpriced. Or the top of a cycle. Some of this is just semantics. Buy too high and when the market corrects you are stuck if you need to sell. That's what I'm worried about and that's one of the things I don't think realtors want to tell you. I would hope a realtor who had been working the same market for 20 years would be able to tell if the markt was overheated and price was too high and bound to come down again.
That's tough because it depends on why a particular locale is booming. How far out to you expect an agent to be able to see to determine if it is overpriced. If home prices rise for another 5 years and then come down, was the agent right or wrong if they told you the area was overpriced?
A realtor can't confirm there's a bubble, actually nobody can confirm there's a bubble until after it pops. I do believe that realtors will have an opinion on whether there's a bubble or not but even if a realtor speculates that the current real estate market is in a bubble, why would they confer that to a buyer? First of all they could very well be wrong and secondly it would hurt sales. To me, a realtor isn't there to give you advice on whether to buy or not, that's for YOU to research and decide.
There is a difference between now and when the bubble burst.
The federal government was the big cause of the bubble. Barney Frank was the leader make it possible for poor people to own homes. They passed laws, that required an every enlarging percentage of home loans had to be made to poor people and people that could not afford to buy home with normal financing. In the end it was 22% of all homes, had to be made to low income people. The lenders had to come up with loans that made it possible for them to buy homes or close their businesses.
The came up with them, 5 years interest only, then have refinance. No money down. No qualifying. And the list can go on and on. Suddenly there was a demand for homes, that exceeded the supply. I know of one extremely large builder, that was raising prices a couple of thousand dollars every time they sold 5 homes. Prices raise more than once a day, and it was a benchmark that drove up other prices.
5 years went by, and people could not refinance and homes were being repossessed, and short sales became norm. Prices in those over inflated areas fell through the cellar floor. These and other bad loans, caused the collapse. It was not the lenders that wanted to make those type of loans, but they had to make them then sell off the loans, to stay in business. All due to some do gooders in the U.S. congress that wanted to get votes from poor people.
Today we do not have those bad loans being made like it was back then, but if there is a recession some people are going to have to sell as they lose their jobs, and there will be a correction as there always is when the economy stalls, but not like the big bursting bubble like a few years ago.
So here are my thoughts. It is really hard to predict a national bubble when your job is to focus on local real estate. I can tell a home buyer or seller what the local dynamics are for my particular market and why I think prices are being driven up.
I can tell you that lack of water has created huge demand in Oregon from CA home buyers. Is that a bubble? Will CA continue to have water issues over the years? That driver of demand here locally has nothing to do with Wall Street. So some agents, that take the time to learn, can tell you what is driving their local housing higher. Then it is up to you to decide if you want to participate in that or not. So the area you referenced in your Zillow link is likely not impacted by CA water woes, but the demand is being fed by something else, maybe retirees. I think the important thing is to focus on the context of the demand that is causing the real estate prices to go up so that you understand what you are getting into when you enter that particular real estate market.
I don't have time to read everything I need to about local developments, zoning changes, proposed revitalization areas, loan requirements etc and read about what other cities might be in bubbles and which ones aren't.
Interesting. I never put it together but I think the California water woes might explain why my home suddenly jumped approximately 27,000 in value in under a year.
Bubble, No Bubble. I am not going anywhere. We plan on staying in our home until we no longer need it.
My thoughts? Buy a home you can afford that you want to live in. Worry about making money from investments. If the price goes down, save and buy another house as an investment. I know the historical prices for my area. I know how high it was when the bubble burst and I know how low it went before a correction occurred.
You are giving realtors too much credit. They don't have any magic crystal ball that gives them the real secret about what is going to happen to the economy.
Always in the past, real estate prices have gone up and down in a cycle-- just like the prices of just about any other commodity. That does not mean there is a bubble; it is normal economic fluctuation. Right now prices might possibly be on the high end of a cycle, but there is no way to know what prices will be next year or the year after, or the year after that. It's possible that this is just the start of a price build-up. Or maybe not.
If you are buying and think that prices are too high and will go down, then take the gamble and wait it out. Maybe that will work for you, maybe it won't.
I'm seeing the banks are starting to give some stupid mortgages and no money down mortgages to people who really should not buy a home, but there is no telling where that will lead this time, and I suspect that it is the federal government interfering again and requiring low income mortgages. That didn't work well last time around, but at least there are no stated income mortgages so far this time.
Agreed, well said.
Most realtors I know are not exceptionally gifted when it comes to financial advice, much less any in depth knowledge of economics that would give them a firm understanding of whether the market was in a bubble or not.
Realtors are salesmen, first and foremost. They know (or they are supposed to) know their product. No different than a car salesman, really. A good realtor knows the local market implicitly, keeping abreast of pricing trends and should be able to judge whether that market is heating up, slowing down, etc. But don't expect them to be able to give you an aggregate picture of the housing market as a whole, across all cities and states. That's just out of their expertise.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
