Home Prices Up 15%. Is there a Bubble?
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The expectation of a bubble bursting may be exagerated upone seeing the most recent numbers from the National Association of Realtors. It looks like some regions may experience a slowing of growth, but not a free fall in pricing.
Existing home sales set another record in the third quarter of 2005, and prices jumped nearly 15%, but even the National Association of Realtors in its report Tuesday said the housing market will probably begin cooling after its five-year boom.
Sales of single-family homes and condos rose to a 7.24-million annual pace in the July-September quarter, up 6.5% from a year earlier. At the same time, 69 of the 147 metropolitan areas studied had double-digit price gains, as the median price of a single-family home climbed 14.7%, year-over-year, to $215,900. That means half the homes that sold nationwide went for more than that, half for less. via USA Today
The most likely situation to come out in the next couple of years will be a holding or slight decline in property prices in some specific regions of the country as these markets absorb the stratospheric gains made over the last 5 years.
John
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Comment by Cole Kenny on 18 November 2005:
Yep, those were my thoughts exactly when I looked at those numbers.
Cole @ The Boy in the Big Housing Bubble
Pingback by realestaterblog.com » Bubble? on 22 November 2005:
[…] I saw a post entitled Home Prices Up 15%. Is there a Bubble? over at The Real Estate Bloggers. It seems that even the most optimistic fans of the market are beginning to realize that the market is cooling. While there is great debate of how massive the fallout will be, few are denying that there will be one in the very near future. What many people are not taking into consideration is the aggressive financing techniques that were used over the past few years. These will have a cascading negative effect as prices cool and houses stay on the market longer. […]
Comment by Dan Marques on 22 November 2005:
Good point. A cooling in the market is inevitable. All markets are cyclical to some extent, real estate has never been an exception to the rule. The question is how bad will the extent be. A decrease in prices also creates an array of new opportunities for the real estate investor. I wrote about your post today on my blog: http://www.realestaterblog.com