US House Price Bubble?

[Harry Tuttle]

Hmmmm, so when the hell is my house in Ohio going to perk up?

[Rufus T. Firefly]

I own a house in a non-boom area (PA), which I'm going to haev to sell eventually in order to buy in a boom area (metro DC). Sucks for me.

Unless the DC rental market keeps being cheaper than owning, in which case I'll rent in DC short-term and buy a nice vacation/retirement property.

Unfortunately, I was going to do that in Rhode Island.

[mrmitchell]

I own a house in a non-boom area (PA), which I'm going to haev to sell eventually in order to buy in a boom area (metro DC). Sucks for me.

Unless the DC rental market keeps being cheaper than owning, in which case I'll rent in DC short-term and buy a nice vacation/retirement property.

Unfortunately, I was going to do that in Rhode Island.

Hey...you know where you could move, where houses are SUPER cheap...

But you won't find a job here...sorry

[Rufus T. Firefly]

Originally posted by mrmitchell

Hey...you know where you could move, where houses are SUPER cheap...

But you won't find a job here...sorry

Of course, there's a reason housing's so cheap there; little thing called supply and demand, I believe...

[mrmitchell]

Actually, what industry are you going to be working in? A couple jobs are very lucrative here...but if you weren't going into forestry, oil, or defense, I would entirely forget about the place until you're rich enough to move your own busienss here.

[DanS]

Originally posted by Colon


Are you talking about the actual mortgage rates or just the rate set by the FOMC? Bond rates have been staying put despite the rising fed funds rate, for instance.

It will eventually flow through. Bonds will eventually give up the fight against the Fed.

[RGBVideo]

The chart looked interesting, so I made a map:

[Rufus T. Firefly]

Originally posted by mrmitchell
Actually, what industry are you going to be working in? A couple jobs are very lucrative here...but if you weren't going into forestry, oil, or defense, I would entirely forget about the place until you're rich enough to move your own busienss here.

I'm just yanking your chain. I work for the State Department so, even though I (like all Yankees) consider Arkansas a foreign country, there's really no chance of me working there.

My problem is that I'm going to spend most, but not all, of the rest of my career abroad. Mostly Uncle Sam will provide my housing, but I'll need a place of my own in DC in 2008-2012 and again probably around 20018-2021 (and, of course, I'll need a place to retire to). Lots of people I know in my position buy in DC and rent out their homes when they're abroad, but laetly I've heard about lots of people getting burned that way; there's just too much rental property in the area.

The thing to do is probably to buy a rental property in a good rental market where housing prices are booming, and let it generate profits and appreciate while I rent for my stints in DC. Austin, TX would be an obvious place to buy, especially since I have in-laws in San Antonio.

I think I just figured out how I'm spending next summer!

[mrmitchell]

Texas works. When you tire of traffic jams and ungodly heat and tumbleweeds and Republicans, you can come to one of AR's 49 beautiful state parks, free of charge

[KrazyHorse]

Arkansas: Missouri without the international flair

[pchang]

Thank you VJ

That map is a much nicer presentation of the data

[pchang]

Real Rates

Mortage rates have been creeping up even though long term bond rates have not moved. What I am afraid of now is that the fed will continue to raise short term rates and created an inverted yield curve. It would only take another 2 quarter point rate hikes to do it.

[Zkribbler]

Originally posted by Donegeal
Ok, Dan, what are the implications of the "bubble burtsting" for a Wisconsin (#13 on the chart) home and investment property owner like myself? Take into consideration that I am looking to either build a new home (to raise my gowing family) or expand my business.

There's definitely a bubble here in LA. You can tell by the irrational buying activities. New condos are being built in downtown. Last year, offers are being made, sight unseen. Then some of the condos were being "flipped" for a $10,000, $20,000 even $30,000-profit within a week.

Unlike the dot.com bubble, real estate bubbles don't "pop." Real estate is fairly illiquid. People need to live somewhere, and so they tend to hold onto their houses rather than engage in the panic selling we saw with stocks. This behavior results, not in a crash, but either in a slow downward trend or a flattening of real estate prices -- which we're already seeing in San Diego.

What will happen to investment owners like Donegeal depends upon the quality of their investments. If the income is enough to pay for the overhead, then the underlying real-estate value won't have much effect. But if the owner is running a negative cash flow based upon the presumption that you'll make your profit when the property sells, then the end of rising real estate prices will leave them high & dry.

[Dinner]

The last 6 months have seen prices stay perfectly flat in San Diego. The market has gone from frothy 20% per year gains to hardly any change but at least it hasn't gone down.

[Provost Harrison]

This has been a major issue in other countries as well. The UK has had a similar increase in property prices which seems to have just about stopped in London but is still slowly creeping up. So this bubble is a really big bubble affecting a significant proportion of western countries.