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Old 02-11-2013, 12:41 PM
 
Location: San Diego California
6,797 posts, read 6,123,233 times
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The fundamental ingredient for a bubble is missing in the current economy, and that is plentiful available credit.
While interest rates may be low, the people who would be driving any potential bubble are sitting on the sidelines with busted credit records.
Rising prices are simply a result of investors gaining confidence that the bottom is in and that there is no advantage in waiting any longer to put their money to work.
I really wish I were wrong about this because I would profit greatly from a bubble, but the ingredients just are not there.
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Old 02-11-2013, 07:27 PM
 
Location: TX and NM on the border of the Great Southwest.
11,792 posts, read 15,811,340 times
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Quote:
Originally Posted by jimhcom View Post
Rising prices are simply a result of investors gaining confidence that the bottom is in and that there is no advantage in waiting any longer to put their money to work.
I agree but it's not just investors who are realizing this. There's a lot of people out there who are not investment-minded but even they know they can't continue to match their earned dollars against the billions being thrown at the economy by the Feds. They want something the Feds can't devalue by simply printing more of it. And too, not only have investors been sitting on the sidelines but many other folks as well. Many have now accumulated significant savings to dump into the down payment for a home.

The reason for rising real estate prices in Texas is more clear. We are being flooded by people trying to flee from States with no jobs but continuing to raise taxes. Texas has a few counties with this same mentality but we have 254 counties to choose from. Locally right now we have a lot of owner-financing going on. I just did one.

Bubble? If it is simply side-lined small money flowing back into the economy, like a small dam break, the heavy flow will be short-lived and prices will shortly readjust. Or it could stimulate a real bubble where the real side-lined money starts to flow back into real estate hoping to cash in on a bubble.

YMO.
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Old 02-12-2013, 06:53 AM
 
Location: San Diego California
6,797 posts, read 6,123,233 times
Reputation: 5171
Quote:
Originally Posted by High_Plains_Retired View Post
I agree but it's not just investors who are realizing this. There's a lot of people out there who are not investment-minded but even they know they can't continue to match their earned dollars against the billions being thrown at the economy by the Feds. They want something the Feds can't devalue by simply printing more of it. And too, not only have investors been sitting on the sidelines but many other folks as well. Many have now accumulated significant savings to dump into the down payment for a home.

The reason for rising real estate prices in Texas is more clear. We are being flooded by people trying to flee from States with no jobs but continuing to raise taxes. Texas has a few counties with this same mentality but we have 254 counties to choose from. Locally right now we have a lot of owner-financing going on. I just did one.

Bubble? If it is simply side-lined small money flowing back into the economy, like a small dam break, the heavy flow will be short-lived and prices will shortly readjust. Or it could stimulate a real bubble where the real side-lined money starts to flow back into real estate hoping to cash in on a bubble.

YMO.
Texas is certainly doing much better that most states in this economy. With currency wars heating up between most of the world’s major economies, I do not see anything slowing down inflation for the foreseeable future. That results in rising prices and profit from leverage for people who still do have the credit ratings necessary to obtain financing. Banks are very cautious now though and financing is not easy to come by. But for those who can secure financing, this will be a window of opportunity.
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Old 02-12-2013, 11:47 AM
 
Location: Bothell, Washington
2,680 posts, read 4,462,741 times
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I can't speak for the country as a whole, but here in the Seattle area housing is going up in price and it's not all a facade, propped up by investors- much of it is truly people who are out buying houses. Employment is pretty good out here, people feel confident and they have money so they are buying houses. Probably knowing that they need to get in before prices get higher again, still scared from the unaffordable prices that homes went to back a few years ago.
There is also a LOT of new construction going on, new developments going in all over the place in the suburban areas- and many of those have "sold" signs on them even before they are finished. So what we are seeing out here, at least, is truly consumer driven.
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