ThinkGlink.com sent a Real Estate Bubble Survey to 4,000 consumers. We had 475 responses, and the summary results for the ThinkGlink.com Real Estate Bubble Survey are quite interesting.
The comments below are from the real estate bubble believers — those who believe that there is a real estate bubble.
These are responses to a free-form survey question: “Tell me what you think about the real estate bubble. I’m eager to hear your opinions.”
It’s already started and yes the more we talk about it the quicker it will happen. I’m starting to see overpriced houses stay on the market longer.
Real estate changes from day to day, and I think that is why many people are afraid to sell/buy because if not the people are not educated on how to refinance, sell, and buy they are afraid to take the step for lack of trustworthiness.
I think the bubble was created mostly by investors wanting to make quick profits. If they start dumping properties willy-nilly, then they will certainly contribute to the bubble bursting.
It is going to be in some cities and some locations where the prices have gone up just for the artificial hype created by some owners
Prices are already coming down in key markets. The decline seems gentle, matching a “gentle” rise in interest rates. It seems like this is more of a breather that a bubble bursting. I hope that continues.
I think there is a real estate bubble. I do not think it is going away any time soon. I also think for Sussex County, it may never go away. I think that people who are born here, raised here, and want to stay here will and are finding it difficult to purchase real estate in this area. We may never be able to afford our own homes. The demand for real estate is here and it is high because we are getting a lot of people from Philadelphia, D.C., New York, places far enough away, but easy enough to get here in a day’s time. We have a lot of attractions, we have low property tax, beautiful beaches, outlets, lots of restaurants, hospitals are expanding. For people who are normally accustomed to living in high cost areas, find Del quite refreshing.
It can’t keep going like it is now. Homes are outrageous and people are more in debt than ever before.
actually I have not that much knowledge of American real estate, but in India, so comparing both price range of houses , properties are very higher than in India
Housing prices are too high for the average person.
the bubble is about to explode
I think people are easily swayed these days by what the media and other people say. I don’t believe that they want to invest the time to research and think through what they hear. They just think they will get rich quick the easy way. The real estate bubble is just another opportunity for the lazy person to lose their shirt!
The markets that have been HOT will see the most decline, the mid west will not be as deflated. The national economy will be hit hard.
Real estate prices need to get back to “normal” and not exaggerated or deeply decreased.
Housing prices are still the lowest they’ve been in 25 years. If the bubble bursts most homeowners will still be in good shape.
Speaking for the Northeast area, I feel there will be a reduction of 15% to 20% over the next 2-3years in R/E values that will last for 5-6 years.
I think the demand for Real Estate has forced prices up at a greater than average rate however I don’t see this bubble bursting as expected. I think that interest rate increases will slow the sale of homes down to a more reasonable growth rate. I see the bubble shrinking but not bursting.
At this time, I think prices for homes are way too inflated with has had something to do with the impact on low interest rates. People are choosing real estate as opposed to other investments because of their losses from the stock market and the economy. They are trying to recapture their losses. However, the cycle has to change and slow down. It is inevitable. When that does, real estate has to slow down from its accelerated pace, and then it will become extremely difficult for those who are late in purchasing to recoup their initial real estate investment. There will always be people who stand to lose as the peak heads towards the valley.
I think Real Estate prices are insane. Average people are being priced out of Chicagoland. Who is buying these multi-million dollar mansions that are popping up all over the city?
Like any other bubble (remember CISCO stock?), when market demands or prices are not met by adequate support a lot can be lost
The north side is way over priced and has been for sometime, but the best deals for space and quality of housing and price is south of 35th, between the lake and the Dan Ryan. The bubble has caused taxes to be overvalued too and that’s hurting many who thought they bought a good priced condo.
It will continue to be out of control.
I think that it is a way to make a great of money fast.
The most important end result will be an increase in the amount of starter homes and low end real estate.
I think that the market will level out and stay steady for a while.
Hope it’s not true. Looking forward to using some of my profit from sale of a second home (condo) in California to help finance retirement.
I think the real estate bubble is a regional one. Locations like Southern California, Boston, Miami and New York City seem over-inflated and are due for a correction. Those who have entered the real estate market within the last two or three years would likely run a moderate risk if the market corrects itself. It seems that a lot of people are not only spending more of their income on mortgages, but by also using creative financing (especially negative amortization/option arms), they run an ever greater risk of getting into financial trouble if the market corrects.
Right now, real estate is extremely expensive here in Chicago. Middle class America is being pushed into buying homes that are not really in their budgets. The lower incomes are forced to be either in a government program i.e. section eight. Or rent. I hope the bubble will break to give someone like me a chance. I believe the housing cost will go down not much, but enough that I can get a great deal on a home fit for my family and not break the bank or my back to keep it.
I live in Atlanta, GA. For the most part, there are no signs of a bubble here.
I’m afraid that there will be a glut of homes on the market soon because of consumer debt levels and risky mortgages. If this does happen, selling prices of homes will drop, and it will become a buyers market, bursting the bubble big time.
I think it is overrated but that there most definitely is one in certain markets (Florida for example). They will always exist and aren’t necessarily bad for the economy.
I think it is an aberration that will self-correct as people are a) priced out of the market (potential buyers) and/or b) )find it impossible to unload quickly at a satisfactory profit the investment properties they have bought. I think it will affect mostly first-time home buyers and speculators in hot urban condo markets like DC, NYC, California, Florida, Arizona, etc. I’m much more worried about the fate of people who have cashed out their home equity.
From the first question, I’ve wished the questions would be more specific. The “Bubble” exists in other places, the coasts, NY, DC; but not here in OH.
“BUBBLE” IS NOT A VIABLE DEFINITION OF THE R/E SITUATIONAL CONDITION. WHAT YOU HAVE IS A GENERAL RISE IN PROPERTY VALUES DRIVEN BY SEVERAL CRITERIA; ALL OF WHICH WOULD HAVE TO CRASH IN ORDER TO EXPERIENCE A “BURST”. WHAT IS MORE LIKELY WILL BE A GRADUAL LEVELLING OFF OF PRICES/VALUES.
There is froth in areas, not a bubble.
I believe that the so called bubble is primarily centered in large metropolitan and recreation areas. My business, land surveying, is currently being affected in the two larger markets we work, but the local smaller rural market has shown very little affect to date. The bubble, if it breaks will affect those that should, also, not have bought and held Beanie Babies. Sadly, the trickle down affect will affect all of us in the real estate related businesses.
The true bubble exists in the massive homes that sell for $1 million and over. They are standing on sale without takers. At the lower end of the market $200,000 to $400,000 homes are moving quickly since housing is a necessity. Those who built these MacMansions will be left holding their big homes. Too much to heat or a/c, high taxes and they will be a drug on the market.
Has already started slowly. I’ve seen housing prices on the eastern coast coming down already.
No one prospect what will happen in further. I hope houses in California will be lower than now. I can’t afford to buy my house now.
I think the bubble has already sprung a leak, prices are already dropping.
We live in a asset appreciation economy. Real Estate composes 56% of our GDP. Once the ATM of refinance, and year to year price appreciation weakens, the whole house of cards falls. John Lund
I’m 74 years old, and have been a residential real estate investor for over 25 years. I’ve seen most of the up’s and down’s for over fifty five years, if we just continue doing our thing and not get all hot and bothered, the market will adjust and we will still be ok. I bought my first investment property when the prime interest rate was above 20%. Everyone should just relax and not do stupid things. Neil Edwards
I come from California where I believe the bubble will be most felt, (as homes have increased unreasonably) but people need to live in a home and buying has always been more profitable then renting. I think homes may drop considerably their (eventually) but only slightly in the Midwest. Wherever there are lots of jobs and good weather, people will want to move there.
It will only affect those people that try to buy & sell quickly to make a quick profit.
I think “bubbles” are cyclic. This is not the first nor will it be the last. If people can wait to sell their homes until a bubble occurs, then they make out well. I, however, do not think that house prices in good areas will drop far.
It exists, but is localized; some areas are affected and others aren’t.
As a new real estate agent, I hope there is a bubble as there with be more homes to sell.
The real estate bubble does exist, but only in certain markets. Those being the very hot East and West Coast, and Florida as a few examples. Those most prone to a bubble are those whose values have run up quickly and increased in value tremendously. There are markets that have gone up slowly and not had the craziness of the hot markets.
It will be limited to certain regions, especially the coasts and Henderson County NV. The bubble will be small and short in span.
Rapid inflation of real estate has not paralleled wages. Consequently many will not qualify for a home. Those that do will be spending an inordinate percentage of household income for the American dream of a home that will transpire into a nightmare of debt! Government must set an example — borrow & spend will have just as severe consequences as Dems that tax & spend. The recent approval of the pork laden Fed HWY bill for a $223 BL bridge in Alaska and AZ Grand Canyon trails for the handicapped is not a spend for the “common good of ALL.” CEO’s that sell concrete to China are ‘sell-outs.’ The higher cost of building materials [supply & demand (to China!)] will never offset the cheaper cost we pay for Chinese imported goods. The bubble burst will perhaps stop farmers from selling rich black IL farmland. Our nation needs a ‘breadbasket’ or food for homeowners living on the fringes of sprawl will pay dearly in food cost. Therefore the ripple effect of a burst bubble will have positive & negative impact. I believe more positive. Urban renewal in the city should be more viable to developers.
I think most real estate is overvalued at the moment, and is selling for ridiculously high prices. But I also think that while the interest rate remains low, then families can afford, on their income, to buy these houses, and if they are the main residence, and the owner takes care of them and improves them, then they will remain in their house, and probably not be hurt too much by a bubble bursting. The ones that will be hurt the most are the ones that plan to move and upgrade often, and businesses. I don’t think talking about it should cause a panic, any more than talking about the dangers of earthquakes should cause a run on the stored water market. It’s only when it really happens (the earthquake) that the panic sets in.
Real estate does not decrease in value. It usually appreciates. If the property owner is willing to be patient and wait out the bubble, he or she can get the true market value for the property. Sell property under value hurts the property around it. If a house is in very poor condition, the property owner should sell the house for it’s appraised value. Too many property owners try to sell their house and try to add on debts that they have incurred. If the property is valued at xxxx number of dollars, the property owner should stick to the price and rent the property. Selling a house to investors so that they reap the financial gain is wrong. I speak from experience. I would rather rent the property to good, reliable tenants who will take care of property, rather than lose money in selling it. Now, if the property owner is in a financial bind and must sell, then take the best price possible. There are those that are not. Bottom line, sell it for what it is worth, Allow the real estate agent to earn his/her commission. Too many real estate agents try to make the inexperienced property owner pay all closing costs and all expenses involved in selling the property, plus their 7 % commission. I am aware that real estate agents earn commission, Now if they want to make the sale, promote the property, show it and sell it. Work for the seller and not for the buyer and earn your commission.
I sold a house in California that I purchased for $25K in 1970. I sold it for $405K in 2003. That same house (I am told) should sell for around $625K today. Just 2&1/2 years later. That is only one example. That house was in Ventura Ca. I believe that most of the bubble you are talking about exists mostly in California, and most other examples are from that area. I do not believe that those prices can continue to rise. Something has to happen. Being that I lived there for 40 years, I can say that the wages do not support those prices. How can anyone afford the house payments? Drive up the coast to Santa Barbara (30 miles) from Ventura, and the prices are a good 50% higher there. This is just my opinion, and I am sure you have many others, as well as your own…Thanks
BEING AN INVESTOR AS WELL AS A MORTGAGE BROKER I AM FINDING THAT FOUR THE LAST FEW YEARS WE HAVE CONTINUALLY GOTTEN BUSIER IN THE MORTGAGE LOAN AREA BUT INVESTMENT PROPERTIES HAVE BECOME LESS LUCRATIVE FOR THE INVESTORS BECAUSE OF THE COMPETITION
I think the real estate bubble is more local or regional than nationwide. Some major cities are not in a real estate bubble and home market values continue to rise. I think it’s a matter of either the local/regional areas moving out of the bubble in a short term period (w/in 2 years) or the trend could move across other major cities. If trend grows, I think it will have a major impact to economy.
I wouldn’t call it a bubble as much as a cooling period. I don’t feel we will see the significant price drops that many are suggesting (perhaps a very few areas will, but not the majority of the country). I believe we will see much slower acceleration in price increases, for perhaps a couple of years at most. The economy overall is in good shape, will prevent a big recession. May just go long enough for some of the people to wise up and not take too much equity out of their homes in the future.
It’s big and will be nasty
I’m not sure what the future holds but I believe there is a real estate bubble and it already has a slow leak.
Real estate, like the stock market in 1999, has become overvalued. And look what happened to the stock market in 2000, following the “burst” of the overvaluation in 1999. Property demand had exceeded supply for a short time, driving prices higher and resulting in a seller’s market. Recent trends show higher-priced homes remaining on the market for longer periods of time, and supply has now exceeded demand. This, too, will level off, but I don’t believe it will happen prior to it having an impact on prices.
low interest rates along with the ability to get interest only loans are fueling the home sales. Real estate agents are raping home buyers. the fees they charge…..
I think it is localized to specific areas.
I think it will take its course naturally if the media leaves it alone. So many people are retiring within the next 2-10 years and will be downsizing and moving into cheaper real estate or retirement condos that there will be a flood of good homes on the market. So many that the prices will go down as they will need to be unloaded. Couple that with all the new homes that continue to be built… When the value of the homes decrease, what happens to the mortgages the people have; many of which had no equity to start with when they purchased. Now they could be paying a $300,000 mortgage on a home valued at $200,000. Not good.
The price of real estate seems astronomical. Soon the news will be reporting the number of foreclosures again as it did in the past.
I live 30 miles outside of Boston, MA. Here there is definitely a slowing of prices, and I don’t necessarily think there will be a large drop at any one point, but I think there will be a noticeable drop
we always buy at low prices and sell at a reasonable price. we are satisfied with a small profit. r
I think that bubble will burst and have similar effects to the situation in the UK about ten years ago. I think it will be more wide spread and more serious than in the UK
I have been looking for a place for over a year and suddenly find I can afford Boston, something has changed and it is not my financial situation!
It is a non-factor for me at this time; I am employed, own my home and am reasonably healthy (thanks be to the Almighty). Ilyce, thanks for being there.
I believe that the effect of a bubble is/will be strictly local. There are so many regional factors involved that I can’t predict how devastating a burst bubble would be. I actually think we need a bubble to bring house prices down so they are more affordable for more middle class people. This will hurt some people, but will help more to gain affordable housing.
I think in some markets, especially California, the bubble is real, but not in the Chicago area yet. I’ve noticed a plateau in prices this year, but am not expecting a “burst” here.
Houses are overpriced. Speculation has driven up the cost way beyond what it should be for modest “used’ houses. When the bubble bursts lots of people will be holding mortgages for more that their house is worth, but maybe the falling prices will be more realistic, and will allow people of modest income to once gain be part of ‘the American Dream”
It makes me wish I owned property in those areas.
The bubble is not only national, but worldwide. When it bursts, the effect will be much greater than the Asian Contagion or the Tech Wreck.
It scares me. I read an article this summer (2005) in our local paper (Bowie, MD) about the housing market slowing down. I thought it was a little premature and I didn’t see any signs of this. Boom… the next day there were all these houses on the market (was the paper right, or did the city react to the paper?) I don’t know, but it made me awfully nervous. Especially since the prices weren’t increasing the usual annual 20% anymore. It seemed the prices were decreasing. A house used to sell in 2 days. Now it is on the market for months, it it gets sold at all. Our next door neighbor’s house was on the market for 3 months. They never did sell it, so they took the sign down. I think the bubble is starting, but I think a lot of it has to do with media talking about it and scaring people. Those people who weren’t thinking of selling (such as myself) are now thinking of selling because of the “bubble” scare. The last thing I want is a home that I have to sell for less than what I owe. Do I stick it out and hope it’s just talk, or do I try to sell when I can still reap some of the profits? These are questions I am now constantly thinking about. I wanted to be in my home for at least 5 years. I have 3 years to go. Any advice you can give will be much appreciated!!!
I believe the economy is going to get so bad and of course, the ones affected will be the poor and middle class. The government does not care about people having foreclosures on their homes.
I believe the bubble is in only select markets, not everywhere in the US. I think California is not a bubble, but may have a “softening” or flattening out of prices. There simply is not enough developable land in a place where many Americans still want to live. Recently, I was in Massachusetts and I noticed more homes for sale than what I expected. From what I have heard about the investment condo craze in Miami, Las Vegas; this may be where the bubble is. All these investment properties would make me concerned. Folks along the Gulf and Atlantic Coast are hurricane-weary, and I wonder if there will be a softening in these markets. Everyone thinks the boomers will retire there, but I wonder? Where I live in Atlanta, things seem to go along at a steady pace. Although I am amazed at how pricey some of these homes have become. I did not realize there were people with so much $$$$$! From the low $700,000?!?
I feel that it is very localized and does not pertain to much of the country.
I think the “bubble” is only in certain areas of towns, states or regions of the country. I’m sure over time some people will pay more for the property than they can later recoup.
I am not old enough to remember Will Rogers, but I know many elderly people that do remember and they have told me that Will Rogers said that it would be the massive construction of buildings that would put our country broke. Did he truly make a statement similar to this? If he did, I believe it could very well be a true statement.
Don’t talk about it.
Bought my house in LA back in 1988. Precipitous drop started in mid-’89 and never returned to original buying price for 10 years. I see the same price movement and emotions out there now. Unfortunately, I believe buyers late in the cycle will get hurt.
I believe some markets are in a “bubble” but others such as Atlanta where I’m from are not in a bubble. It’s places like California and New Jersey that will be hurt.
I think that the relevance of the bubble depends on the area of the country that you live in.
The problem is that in Atlanta there will not be this problem, ie. real estate values are leveling off and besides our appreciation rate is only 4.5% over the last 5 years or so. Calif. and Boston should be concerned. In Calif. there are a lot of properties for sale and fewer buyers. Thus, prices are now not going up and may be in a slight decline! In Boston, unemployment may be a problem and they could have even faster price decreases in homes. Each area is different and so my comments really are talking about the “hot” markets and not the majority of real estate markets like Atlanta, Dallas, Denver, Seattle, etc. DAVID ALTSHULER SR. MORTGAGE CONSULTANT COTTON STATE MORTGAGE (IN FIELD FOR 18+ YEARS)
I’m not sure there is a real estate bubble in the metro Atlanta area. There are places in the area where the real estate prices are very high, but some say these prices are high because of good schools or proximity to jobs. Many people in metro Atlanta drive long commutes to exurbs where housing prices are lower. Atlanta sprawls many, many miles.
The market corrects itself every so many years. It is now art a point where the values are so high that it can no longer sustain itself. Eventually adjusting itself to true market conditions.
I’m not that knowledgeable about it. I believe the interest only loans have been very bad and many people will be sorry they took them.
Middle America is pretty safe and “sane”. The coasts are ridiculous. Very similar to the “dot com” bust in the stock market. When people will no longer pay those prices, the owners will lose the run up they have seen or the value that they have recently paid. I think we are on the verge of numerous bankruptcies of folks that have bought inflated houses within the past two years if they have to sell.
People are stupid (me included – except that I try to listen to you, Clark and others). They have no idea of the long term effects, as long as they are able to get what they want….and NOW!
To be honest, I’m not sure if what is going on is a “bubble” or not. My concern is that I feel prices are inflated right now, people are securing huge mortgages, and there is way too much building going on…at least it looks that way in Atlanta. I am very concerned that when we get ready, within the next year, selling our home will be very difficult.
Prices in re are no different than any other market they will go up and they will go down. Its a market not a rocket with unlimited fuel. Remove the fuel and that market will go down.
I live in Atlanta and a very good school district and haven’t seen the bubble as compared to my son trying to buy a house in San Francisco.
I presume there is a bubble; prices cannot go up forever, especially at the rate at which they are going up; incomes are not rising at the same pace so it is going to get to a point where the economy cannot sustain these meteoric increases; as to how long it will take before it all comes to a head, I cannot say, but I think these increases cannot be sustained forever.
It is a downer. The average person is being locked out of the future home market thereby killing investment.
Property is way overpriced. Sadly it continues to be fed by the lenders… The mortgage industry started the merry go round and now they have no idea how to stop without a crash..
As a beginning real estate investor, it is frustrating trying to find investment property in my area of Santa Clara County, of California.
I don’t like to use the term “bubble” because it infers that when the bubble “pops” property values will decrease dramatically. I believe that the real estate market is leveling off and might take a dip for a while. But as history repeats itself, over the long run property values will continue to rise.
What goes up comes down. We need to be realistic about the expectations we have about the real estate market and not expect our properties to continually be appreciating in the high digits.
Interest rates rising will affect a large number of homeowners. Some people will be forced to sell and that is when the problem begins. As In the 80’s people will be upside down on their loans. Sellers will have to add money to amount they receive at settlement. Available homes will increase and it takes years for the excess inventory to be absorbed. Our economy has run on people feeling wealthy. They won’t feel so rich anymore.
I believe that the real estate bubble hasn’t come to the point of bursting instead I believe real estate property increases are leveling off for now.
It’s not country-wide, so if you appreciated 50% year upon year, you will be due your come-uppance when rates continue their upward path!!!
I THINK IT IS REAL AND CAUSES BY THESE JUST INTEREST LOANS AND OTHER ?ABLE MORTGAGES
Generally, incomes have kept pace with housing prices in many areas (not my idea). However, there is rank speculation in many condo markets and in some coastal areas. When long term interest rates rise, and they will, this will reduce demand greatly. I do not know how much very low down payment or floating rate paper there is, but these people will really be hurt, especially if there is a recession.
I am a resident of Louisiana, and there have been reports of landlords unlawfully evicting local residents in order to house hurricane survivors thus attempting to take advantage of FEMA funds. So I do believe that people will hastily build and buy real estate in order to take advantage of government money thus adding air to the bubble.
Currently it appears that the notion of “affordable housing is just that,” a notion. In the region I currently live in, previously the focus was homeownership especially for 1st time buyers. The market is so tight, affordable rental property just does not exist. For individuals looking to buy, it’s ” a sellers market, ” with basic no frills, 2 bedroom homes selling for over 10000.00.
I think it is a regional thing especially in highly sought areas like the coastal areas and certain cities. The big question is will those effect the more common household. I think there are localized areas where folks because of looser available loans have gotten in over their heads and cannot maintain the house. But those will be more isolated rather than in areas.
Luckily, I live in a buyer’s market so this has little effect on my area’s economy. Overall, the “bubble” has prevented first time homebuyers from taking advantage of an opportunity to make their money work for them.
I think the popping of the “bubble” will be less severe than many anticipate. It may result in a flatter market, not necessarily a depressed market. The luxury market will not be nearly as adversely affected as many think. There is a lot of money coming with the baby boomers to keep Florida and other second home communities relatively stable. My main concern is how hard middle and lower income areas, where typically more people are mortgaged to the hilt will be affected and any resulting trickle up/down effect it will produce.
Not only is something only worth what the market will bare. It is only worth what it is worth. If it is worth more than someone can rationally afford, I do not beleive the seller will be able to sell, in lies the bubble bursting. I can hardly wait.
Not all great things last.
NOT BURSTING!!, ONLY LEAKING OF A LITTLE AIR! MAYBE ENOUGH THAT PRICES ARE ACTUALLY WHERE THEY SHOULD BE!
Prices have gone sky high. People cannot afford the prices but buy anyway, especially young people since they are not afraid of debt. It will hurt later for them.
I believe that the price of homes in some areas of the country are so inflated that we are bound to see an adjustment. The ramifications of this are going to hurt about 10-15% of the country only if people have to move or sell out. If people would be able to stand pat and not overreact they will survive.
The bubble is real. One only needs to read the research concerning the median home values over the last twenty years. Current values are 2.5 times the mean, that equals bubble and history shows that bubbles always deflate and that prices revert to the mean. Those who don’t think there’s a bubble are the same ones that told us about the new economy of technology in 1999. The problem will be large since a very large portion of the domestic product is being supplied by housing. This will certainly go down and personal bankruptcies will rise. Could possibly affect the banking system. Remember the S&L crisis, the government had to bail us out of that by 450 million.
The real estate bubble is contingent on the economy, and directly corresponds to unemployment rates. If the costs of oil and natural gas, rates of unemployment and interest rates rise, people may be forced to budget more and borrow less. To budget monthly expenses, people may downsize and sell their homes. In a climate of uncertainty, homes will not be easy to sell. For instance, if unemployment rises, homes will be on the market longer and prices will drop to more realistic prices.
I think the bubble is actually a market correction. Hopefully banks will come in to line and appraise houses for Home Equity Lines of credit that folks can actually afford. May even see a decrease in the amount of Foreclosures. More folks will be able to enter the market as first time home buyers, while others will be able to move up. I think this would actually be better for the economy.
The bubble is not national but in effect in various markets. For example, I recently relocated to Eugene, Oregon. Property values have increased more than 20% for the past two years and that has changed the economy greatly. California appears immune to a bubble crash. Both places will have to calm down or people will not be able to afford taxes.
I think it exists in certain areas of the country but in others, like here in Chicago, its effects aren’t felt as strongly. I believe (perhaps naively) that Chicago will always be a strong real-estate market, at least for residential properties.
I live in an area where the real estate is so high the average person can hardly afford to live here. I think it will have a terrible affect on the country.
I don’t know if I would call it a bubble, more that prices will stabilize and see the end of double-digit appreciation rates across the country.
While my participation in the “Housing Bubble” was necessitated by outside forces, I did purchase a condo at what I knew was a relatively high price, and after 2 years of trying unsuccessfully to sell at a small profit, I ended taking a loss. This was because the area is overbuilt and over priced, and too many other owners are trying to sell the same thing at the same time for relatively similar prices. However, the average cost of living in a safe, clean, dry home of my own was $240.00 a month. It also allowed me to purchase for cash a property I really like and fix it up to my needs; and then, to sell to someone who really likes the condo on terms we both regard as acceptable. This to me is the essence of real estate. As a result, my attitude toward the housing bubble is that I do anticipate many people will be hurt because of ill advised use of equity lines of credit, or second mortgages taken during a time of artificially inflated house values. I do not anticipate being one of them. I would like to see tighter controls on predatory lending practices and more oversight or second opinions regarding appraisals. Foreclosures on bad loans to people who should have been screened more thoroughly, hurt all of us. Ohio leads the nation in foreclosures of this type. Builders should make a profit, but buyers have a responsibility to not pay more for the property than it is worth just because they have the money or someone convinced them it would be easy enough to get. I see little to excuse someone from getting burned in real estate when so much free information and so many resources exist. Ignorance is no excuse; knowledge is power. Sharon Lee Holdren P.O. Box 368 Mount Vernon, OH 43050 P.S. The question on the effect on the economy needs an additional option between mild negative effect and massive negative effect. My opinion is somewhere in between. Especially since this is such a big country and what can devastate on region can have a lesser effect on another.
I live in metro Atlanta – just north of the city – about 35 miles north in the city of Kennesaw, a city within Cobby County – a somewhat affluent county of Metro Atlanta and Georgia wide. 3 years ago, I bought my 1st house – at the rates were still low (6 percent or less for a 30 year fixed). I bought a slightly below market value house for $160k. The house is now appraising for $210k. The reason I think we are in a bubble is because I don’t know of many people that make enough money to buy a starter home that is even remotely nice/decent. The starter homes in Cobb County are now relegated to the ‘bad part of town’, if you will. So, for example, a $125k or so will buy a modest townhome or condo in a ‘upper crime’ area of town. Whereas, 3 years ago, the same amount of money could have bought a small home/cluster home or nice townhouse in a nice part of the county. So basically, the money you could have spent 3 years ago buys much less and much less safe of a house – in today’s real estate market. I can see people getting ‘priced out’ of the current market. These folks are destined to be renters or must move further out to afford cheaper housing (or less-safe/undesirable locations).
It has happen before here in California where I live on the central coast nore than once since I have owned homes. It has had no effect on me because if you do not buy or sell it always comes back around. The real estate inflation bubble has never deflated lower than I have had invested in my real estate property. But than again I never buy when it is high. If I was forced to move and acquire new housing and the market was as is today I would rent until things leveled out. No need to panic — just think ahead. Most people tend to get greedy and mortgage themselves to the hilt when they have equity in their real estate. This is where the problem lays. Most likely those same people would find a way to lose the money anyway some way or another. Not realizing it is not real dollars they are spending it is just on paper. Be safe, be smart, think ahead and time will fix all.
All bubbles burst! real estate is no different. lock in your mortgage rates NOW or sell!
The “so called BUBBLE” exists because government changed the tax laws and interest rates are low. If the government changes these factors then the ball game will change.Anew game to make money at will come about. Its just a game.
Debt has exceeded “popular”…rather it has become an accepted way of life. As work leaves this country and jobs disappear, bankruptcies will pass the already record levels. Banks will not do well owning all those properties…as banks fail, so will our economy. Record numbers of immigrants that bring little, if anything, but do a good job of taking, further enhance the financial load on our economy; we benefit from the cheaper labor, but there are too many, too fast, and most are peasant-level. They don’t become Americans, but rather, bring their culture with them and our “open society and programs” let them succeed. A Chipmonk in the Whitehouse, surrounded with yes-men, extends the incompetent management running our land. Our two party system, for too long, has left our choice to the lesser of two evils at election time.
My opinions: The “bubble” is not nationwide. It only exists in the hot markets such as Washington DC, NY, NJ, Las Vegas, etc. When the bubble bursts we will only see a correction of home prices of about 10-15%. There will not be a great number of new buying opportunities for first-time buyers like me when the bubble does burst because: A. Interest rates will rise to near 7% in 2006 B. Home prices will adjust down about 10%. C. “A” will off-set “B” and it will still cost too much for me to buy a home in NY/NJ area.
With the banks ever-increasing aggressiveness in approving loans to people who, a couple of years ago wouldn’t qualify, and the stakes being higher every time. It won’t be long for an external agent (such as a massive layoff of employees from say GM auto)that this issue will make it to the front page and people will take notice.
Just like the stock market, Real Estate will burst and investors will find another venue to invest in.
We are trying to sell our home. Our concern is that when this bubble bursts we will be stuck with an expensive home and no market. If people would only lower the prices of their homes and not try to make such a killing financially then perhaps we could get back to more realistic pricing.
I think houses have gone up so high it’s ridiculous. This is probably what will cause a bubble to burst. I’m no expert or old enough to know what happened in the past regarding this issue but it wouldn’t surprise me if it happened. On the other hand, it wouldn’t surprise me if it wouldn’t happen either because the major activity on the home buying and refinancing etc. have modestly helped the economy.
It is noticed more in the western states and Florida. I believe it began during the fall last year in California, and prices have already begun to fall.
Chicago has historically been a “last in, first out” city in terms of bubbles or dips in the economy. The latest bubble is in real estate, generally a very sound investment which has seen terrific (and in many condo/townhome cases – terrifying) growth. This amazing amount of growth combined with the fact that much of this property is priced at the high end of the market will result in the bubble deflating as the buyers are priced out of the market and as interest rates rise. I believe much of this is at the hands of new developers whose common sense is blinded by the dollar signs created by the developers and projects that came early in the bubble and made many very successful (read wealthy).
The increase of property values are going up at such an alarming rate that it should level off within one year. I believe the political environment may be a significant influence (presidential elections and congressional elections) because that’s an economical indicator (good or bad). Should be interesting, though. Also, the war in Iraq is an economical indicator.
The Bubble is a matter of demographics. We will see a sharp decline in demand in the next few years.
Not all markets are over-valued. Those that are will see the worst problems, but the overall negative effect should be somewhat local. Owner-occupied homes should escape the worst damage; savvy investors should be able to weather the storm; many marginal investors will loose big, but they are probably a small part of the market. I think the housing futures announced by the Chicago Mercantile Exchange may help in the long run, but as they don’t go into effect until the Spring, they will have more impact in the third and fourth quarter of 2006. That bodes well for a strong housing market in 2006, though probably not record-setting.
Of course there’s a real estate bubble. It’s ridiculous for people to dismiss the idea off hand. The prices for real estate all over the country, especially on the coasts (where I live), have risen so much that there is no way for people to recoup the amount they paid for house when they go to eventually sell. That’s speculation. I have yet to buy because I can not bring myself to pay $300K, $400K+ for a home; not because I don’t ahve the money – I can easily afford a house at that price. I choose to put my money in other places for now (I’m a big saver: stocks, bonds, mutual funds etc) I think that it’ll be late entrants into the market, those who were swept up in the hype (just like during the tech boom) who will be left trying to sell a home for $200K that they bought a few years ago for $450K. And that’s when I’ll be the one knocking on the door! I’m almost eagerly awaiting the bubble bursting. I don’t believe it will have a significantly negative impact on the economy because there will always be people ready to buy. The media needs to sell their stories, so there will be stories about the terrible impact of the real estate bubble. The worst is that people tend to have a “herd mentality” – buy when everyone else is buying, sell when everyone else is selling. If everyone is trying to sell at the same time, of course, they will not be able to get a premium for their property, and that will be the issue. They hear the bubble burst, people panic, immediately try to sell to be ahead of the wave, get caught in it anyway. Vicious cycle. Those are my thoughts! Thanks
The American economy is built on the principle of own more and consume more each year. Very low interest rates have allowed people to get into homes that they could not otherwise afford, which in turn has supported a great deal of activity in home construction. Once people can no longer afford to trade up the cycle will be broken. At best the economy will be flat until incomes rise to a level that will support higher levels of home construction. This could be made worse as the baby boomer generation starts to trade down in housing, due their reduced needs.
I don’t think it is nation wide. I think it is in just certain states like, CA, FL, NY, CT, NV.
I think it is like the Clinton Stock Market Bubble. That one was a con-game by the feds and this replaced it (people want something for nothing and don’t want to get rich SLOWLY). 401k’s dropped 50% and I predict that houses will too. Anyone with a giant mortgage (through their own stupidity) will whine for the government to get them out of their self-induced mess. This country’s people lack ALL personal accountability. I’d love to communicate with you and tell you how I and my wife got rich and are quite UN-exposed to such stupidity as these two bubbles. I get tons of junk emails so put something GLINK in your subject line.
Prices cannot afford to keep increasing. Current and future wages will not keep up with the inflated prices of real estate. Should the Fed keep increasing rates on a monthly or quarterly basis, the real estate market will cool quickly.
It exists mostly in certain locations and markets where jobs pay well and living expenses are high. California, Chicago, Boston, DC area Other cities have the bubble somewhat but people are not buying houses with interest only loans to afford them. Maybe some people with lots of equity are buying 2nd homes and fixing them up and trying to flip them. I live in the SW and most of the “hope to be flippers” are from California.
In my opinion, the real estate bubble will burst once the majority of people start hitting the age of 60 to 65. These elderly people will want to capture the gain on their real estate, all of the elderly will get the same idea, so subsequently the real estate prices will turn down dramatically because of the flood of homes in the market.
I think the bubble will burst softly at first gaining momentum as it falls. I also believe the tipping point has been passed.
I believe we should talk about it because if this occurs you need to have a strong game plan to survive it and continue to have future success. The less you know about a thing the more vulnerable you become to its attack.
The real estate bubble has got to burst. The housing prices in the Washington, D.C. suburbs are outrageous. Furthermore, condo development and condo conversion is everywhere and I believe this will be the first to burst in the market. In Washington, D.C. the condo market is out of hand. 3/4 million dollar 1 b/r condos are 1 block from drug dealers and more condos are on the way. I will be waiting on the side lines to be part of the vultures that take advantage of the burst in this segment of the market.
The real estate bubble is massive in DE, causing current homeowners to swallow the punch of increase in property taxes, increase in homeowners’ insurance and possible zoning ordinances. Secondly, DE is a small state, not anymore, influx of families moving in from tri-state areas are causing DE to expand at rates we’ve never seen before. It’s good for real estate agents and contractors, money, money, money, but the real estate boom is taking away the preserved lands that once was farm land, that once was tree farm land, that once was habitat for the environment. . . . how much more can they take, how much more can we take. I feel there needs to be a form of quality control on building, therefore if the real estate bubble burst, it may be a sigh of relief in some way, shape or form, leveling off the massive construction, and preserving what lands we can for the sake of the environment. (ard11102005)
Bubbles exist only in some markets. Bubbles are local phenomenon, not over the entire country. I think there will only be a mild effect overall, even if there is a massive effect in the local areas where bubbles exist. I think the biggest effect will be on the construction industry – people no longer will be able to afford the huge McMansions, which seems to be what most builders are building.
I am located in North-Central Ohio. Existing homes in the rural areas are not selling as in previous months. Foreclosure sales are up significantly. However, new house construction seems to be continuing. This is especially true in the larger metro areas, Columbus. An old saying, the market is driven hope, fear and greed. I since the market has switched from hope to fear in the R/E Mkt. later this summer.
In the south, Atlanta, where I live, because it is a buyers market, people who previously could not afford housing are first time homeowners. So in this manner, the bubble is having a tremendous affect on the mortgage industry, and concurrently all the industries that affect home ownership. (i.e.) Home repair stores, decorating stores, home service companies, etc.
I think there probably is a bubble brewing. but I don’t believe that bubble will burst in some prime areas like Vegas, Arizona, and Florida. because of the baby boomers wanting to retire in these areas, they will still be in demand. and if the bubble bursts, I realize this is an opportunity to move in and gain some property on a cheaper level, for those who over-extended themselves. Also, living in Ft. Lauderdale, FL, post hurricane Wilma, many are scrambling to sell and leave. they’ve had enough. but before the hurricane, many of the people that I know, have been moving only to northern Florida. so that area will flourish, and become more developed. and the areas left behind will be left for the northern retirees to fill. and since they’ve never been through a hurricane, they will buy eagerly to live in the Florida sun. so, yes I believe the bubble may burst for some who have over-extended themselves, and have not bought in the right location. Florida, in and of itself, is going to develop, and flourish, despite the bubble. that is my opinion,and what I see from living down here. – a Hurricane Wilma survivor
I expect and hope the market will slow down since it has been going too strong for too long. Prices are just TOO HIGH. The economy is suffering with recent hurricane disasters, worthless wartime spending, high gas prices and potentially higher interest rates. People are stretched too thin and the market needs to ease up!
Here in Metro Atlanta I see new construction everyday. I also see a growing number of houses and commercial properties for sale or lease. As I see it our market can only bear so much growth. there has to be a balance between new construction and resale. Sooner or later the scales are going to tip one way or the other and a lot of people are going to loose out.
I recently moved, and am in the unique position of deciding whether to buy a house or rent. I’m likely to rent for awhile for a number of reasons, one of which is I don’t want to get caught in the real estate bubble burst. I don’t think that home prices will fall that much (homeowners won’t allow it), but they will level out for years to come, with discount sales from people who have overextended their credit or were trying to flip a house and couldn’t flip fast enough. The sharp rise in oil prices and housing prices will drive higer cost-of-living raises for upper level professionals, widening the gap between unskilled and moderately skilled blue collar and highly skilled blue collar/white collar.
whenever property values drop in ca., they come back even stronger than before.
To me it does seem that houses are selling for way more than they should – mainly in the more expensive homes like 400k and above. I think those people will have more to loose. I’m worried about a lot of people taking out home equity loans and if their house prices drop they could get in trouble financially.
No different that the other Bubbles in Economic History…. ie 1929, and et al, before that. I do think there will be a downturn; perhaps not with “massive” effect, but it will be significant. Too many folks forgot to invest their massive profits into bonds, stocks, etal, got a “low payment” loan, ie balloon, bought a huge house, to keep up with, or exceed, “The Jones”, and all that is going to come to an end and “they” may be “jumping out of the windows”. The barometer is in California…. Buyers are not standing in line giveing Sellers multiple offers any more; it is taking a week vs. one day, to sell now. There has been economic “Roaring 20’s in the 00’s” for a good while now; Interest rates way low for way too long, “to get the housing market going which will get the economy going”, which did not work for the past 10 years, and the hype, this time, has been “Buy Real Estate, that is where “it” is…vs. the stock market or whatever; But the “buy” is in desirable commercial centers, or multi-unit housing, not single family, which is where the buying took place…. it will be fun to watch…. reflect on the DotCom boom as well…..there are still foreclosures out there from the DotCom guys. Another subject…. Foreclosures… whew!! While I have you…. I think it would be prudent journalism to expound on 2 Mortgage Loan subjects…. 1) Discrimination & Interest Rates…. the Loan Officers I have talked to tell me certain folks, not certain Nationalities, are sold Higher Rates, or declined because of their Credit History and NOT their Color or National Origin. 2) Someone needs to get Licensing going for Mortgage Loan people. EVERYONE in the Transaction is LICENSED EXCEPT the Mortgage Loan guys. And that is my opinion(s)…..
I think it relates to the debt the American consumer carries – it cannot continue forever and I do think real estate is artificially high.
We live in the Boston area and have wanted to buy a house for over a year now. The prices are just so high that we can’t afford it, at least for another 3 years when the kids start kindergarten. I’m told that this is a bubble and eventually it should adjust itself. This is one reason we’ve been counseled to wait. Another reason to wait is that we’re just not sure how long we’ll be in this area. If we buy now, during what is considered a bubble, and have to leave within 5 years, it will not be a good return on our money.
There are a number of people that are over extended when it comes to real estate – purchasing homes with ARM’s or no interest balloon loans. These folks will have a hard time as they count on the value of their homes to rise to pay for the mortgage. But, I think most people aren’t in this situation, so the overall effect on the economy won’t be massive, but we will all feel the pinch.
There is this feeling that “God is making more people, but not making more land” and that is what is driving the bubble. Besides, people find stocks and shares too confusing or are intimidated by them, so they choose like lemmings to go with real estate as the best investment option. They pick up land at high prices and have to sell it again at low prices or worse, their rate of return over a long period of time is diminished as they have picked it at the top of the boom.
Real Estate may be a little overpriced but by no means enough to make it a bubble like the old dot com bubble.
I think the bubble has already started to burst. I had dinner with my realtor the other days and she talked about how slow things have been and how things that would have flown off the market at this same time last year have been sitting for weeks. She also said that people are backing out of deals more than ever, even after the P&S has been signed (10%). It’s turned into a buyer’s market, but I think interest rates will go up and prices will continue to come down. Colleen
Ilyce: I think the bubble exists in regional contexts. In my home area (Eugene, OR) residential properties are at least twice, sometimes three times as expensive as they are in many other locations. I can’t see how this level of inflation can go on perpetually. At some point, probably driven by lots of other factors, people will stop buying or slow way down. The only ones hurt will likely be those whose properties actually devalue, but overall won’t affordability be better for wider range economic health? JR
People should talk about real estate bubble.
I believe that it is a hype that has reached a stage like the stock market; how it started I would like to know; this thing about CMA when evaluating a house in a neighborhood is not an exact science for individual pricing of a house; I would like to see another method used for true values;
I believe the real estate bubble is a planned political move. I’m not sure just what the actual purpose was, but I don’t believe it occurred to benefit those that are in need of it most. A few have benefited but many more will be hurt by it.
It directly proportional to the monthly cost of a loan. Demand, supply. Jobs, income. Affordability. Value = (sales cost) = jobs and income.
The real estate bubble really exists in my opinion. Values have increased too dramatically to account for simple appreciation.
There is always talk of the ‘real estate bubble happening. I am from England and it is a subject that everyone likes to talk about. With all the world crisis right now I believe this impacts the economies of the world. Real Estate has nearly always been a good bet compared to the rocky stock market but I feel prices are are greatly inflated right now. Georgia has the highest foreclosure rates in the US.
I’m worried, but feel that effect in Chicago won’t be nearly as bad as the coasts. However, the economic impact will hurt us all.
I am in Arizona and a real estate realtor for many years, I have a feeling that eventually we are going to have some kind of correction in this market but based on what is going on here in Arizona there is more likely that it will take a few months or may be a couple of years, we depend very much in out of the state investors since they see how affordable is to purchase land, units or homes, I have many homes myself and I think I should buy more, that is my personal opinion, I used to sell homes in California when the market was really bad and take months to see prices going down.
As a real estate investor, I am looking forward to the bursting of the bubble. Prices have been artificially inflated and need to come back to reality.
Government involvement means its a real problem and they are always late to respond and usually do not correct a problem.
if there is one, I want it to last until I sell my home in the next 3-7 months…..
With the new bankruptcy laws, and many of these being investment or vacation properties, their main residence could be in jeopardy.
I cant wait until it happens
There is a bubble but it’s mainly in select states. California, Florida, New York and other metropolitan areas are the most likely areas to have a price correction in the next few years(1-5).
GO ahead what ever will be will be. Let the nature take it’s own course!
I think that the bubble, rather than popping, will deflate slightly.
I’m sure tired of not being able to afford a home. I so wish I had jumped in the market in 2001, but my job was not secure so I couldn’t. Now I very much regret my choice. I should have dived in head first.
My prediction is that it will be more likely to happen as the result of a catastrophic event (possibly another terrorist attack) in our country. People will be panicked and in too much debt and need/have to sell. Lots of bankruptcies will occur and house prices will greatly come down.
Having work in the real estate inspection field for 20 years (Seattle area) I’ve seen real estate go sideways, but never down. Real estate is not like the stock market where you can sell in a few minutes, it takes weeks or months to put together a sale and that in itself will mitigate the effect of any bubble. Is it there, yes! Will it cause a big problem, probably not in most areas, it might in a few, but I think they will be driven by local issues. Kind of like what happened in Seattle in the 1970’s with the down turn in the aerospace industry, where the saying of “Last one out of Seattle, turn out the light” came from. In the late 80’s we saw it go side ways when we had a whole sale move from California, where they were selling there modest homes for 250,000 to 500,000 and buying the same home or bigger for 150,000 and bumped our market up. Five years later, those that bought in that market had no growth and were selling five years later for about the same price. Some area’s are down or slower and some others are very hot such as LV and Az and that is fueling the market increase in southern Utah and parts of Idaho in the same way Cal did to Washington. Just my thoughts.
This is pricing some of my middle income clients out of homes. I’ve seen a lot of people roll debt into their homes – because they could. So, I see more money tied up in real estate without paying it off. I can see it starting to level off a bit.
A real estate bubble exists when the real estate prices have been at a high for some time without corrections being made. The high prices have to burst even though it will get back to that level and go higher over time (probably in this case within 2 years.)
I am hoping that nothing happens, I currently have a home being built for resale
It’s obvious that some areas have unreal appreciation of real estate value, and some areas have real estate bubble. I am happy for those who were able to take advantage of it. However that was almost “too good to be true” and it must end. Otherwise it will have enormous negative effect on the economy. Even the burst of the bubble may have some negative effect on our economy, I’ll be glad it will be over. I am also glad that the bubble is happening just small parts of country and not all over the country, which should keep the “damage” to its minimum.
The non-fixed mortgages (when rates go higher) will send a lot of people into extreme financial difficulties/possible high runs of foreclosures and now the bankruptcy laws have changed
I believe that owning a home is almost unheard of now and with the prices going up the way they are it will even be more difficult to purchase going forward therefore the bubble will burst and people just won’t buy anymore
I think the higher interest rates will cause forecloseurs and backruptcies, home prices should fall quite significantly in the bubble towns, and should stay depressed for the next few years.
Property values seem overpriced now. I have to think that prices are going to go down soon. I’m definitely not investing in real estate right now because I think it will be cheaper in six months.
I live in Ohio – foreclosure capital of the nation where the interest only and 2-1 buydown problems are hitting left and right –
especially in the new build subdivisions where you’ve got houses that sold new for $155,000 now only selling for $135,000 after foreclosure
and there’s nothing wrong with the house.
Market seems out of control.
I believe the housing market has been flourishing for several years while breaking several records along the way. Everyone knows that it can’t last forever and just like the economy it goes in cycles. With rising gas, oil, interest rates and the war in Iraq, I believe the economy as a whole will slow down even further. Referring back to the historic cycles of the economy.
While there is a great deal of hype about the “bubble” I can definitely see that people are starting to come down in their prices and it is
taking longer to sell homes.
There’s an end to everything good thing.
I just hope I sell my house and buy my new one before it happens : )
The bubble is concentrated in a few areas. The West coast, Washington, D.C. and a few other high growth areas. The bubble is creating a lot of speculation and that probably is where the most serious effect would be felt. A lot of people are playing the housing market as if there is no or a limited potential for loss. The loss may not be heavily felt in the economy,