I'm seeing "experts" (usually with a vested interest in the bubble continuing) saying there's no bubble, well, except for some areas that are gonna blow.
See my post yesterday about bubble qualities - DENIAL was the final proof. Well, we're there.
Bad news for the "there's no bubble here" crowd - when it crashes in Phoenix, when it tumbles in San Diego, when Boston's meltdown gets ugly, every city will feel the pain. Why? Mentality. People in Cleveland will see what's going on elsewhere and in the back of their minds, they'll be just a little nervous buying that new condo.
And consumers nationwide will pull back, worried their market may be next.
Denver Post 12/28:
The Denver market's growth is slow and sustainable, unlike skyrocketing markets in Phoenix and San Diego that are likely to crash as mortgage rates rise and the economy slows.
"I think it says the housing market hasn't collapsed, but it's a sluggish market, particularly in terms of prices," said Tucker Hart Adams, a regional economist with U.S. Bank in Denver. "I think the parts of the country that are seeing these double-digit increases are just headed for problems down the road."
AP 12/27:
The head of one of the nation's largest home ownership service providers says home sales may slow down next year as supply catches up with demand. But HomeServices of America president and CEO Ron Peltier says there is no real estate bubble.
Peltier acknowledged in an interview with CNBC that some markets -- such as Las Vegas, Miami, New York and southern California -- are "overheated." But he says prices in most markets should rise in the low single digits in 2006.
UPI 12/25:
Richard A. Smith, chief executive of the soon-to-be-independent real estate services division of the Cendant Corp., says there is no U.S. housing bubble.
However, Smith did acknowledge regional housing bubbles, such as the savings and loan bubble in Texas and the bubble in Southern California.
Palm Beach Post 12/26
Some 73 percent of well-to-do Floridians expect double-digit increases in the value of their homes over the next five years, while only 5 percent expect a decrease in home values.
December 28, 2005
Oh, denial... "Experts" say "no bubble here"
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There is a lot of spin out in the media. The Realtors, bankers and builders have been trying to squash the Bubble Theory for months. However, because of these blogs and studies by independent organizations, the word is out!
PMI (Private Mortgage Insurance) did a study a few months ago and published a list of cities in Florida and their over evaluations. PMI has no axe to grind either way. Overpricing raged from 20 to 80 %for places like Tampa, Miami, Naples. I beleive Naples came in at 89% overvalued. This is truly hard to beleive, but possible.
Far cry from forecasts from Realtors, Bankers and Builders.
Lets keep score and see who is right and who is wrong!
I lived for many years in the rust belt. Now I live in Phoenix. No doubt the housing market is different. But folks who say prices won't decline in the "non-bubble" markets are seriously deluded.
NEWS-FLASH: If local prices weren't rising during several years of insanely low interest rates, it's a sign that not very many people who can afford to buy a house want to buy one in your area. Once the interest rate stimulus has been removed, prices WILL decline.
It's true that people in the "non-bubble" markets don't have to worry as much about speculators withdrawing from the market. That factor is more than offset by poor local economic fundamentals that kept housing prices depressed during the boom years. Meanwhile, home builders kept increasing supply.
Prices in many of the "non-bubble" markets will fall quickly because they don't have large numbers of professional twenty-somethings waiting in the wings to buy as soon as prices go down ten percent.
Even if prices don't fall as far in the "non-bubble" markets, the pain will be at least as great. The economies in these areas are already stressed, and folks who bought two or three years ago don't have the famous "equity cushion" from appreciation.
Good luck to everybody - we'll need it.
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