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If a RE agent could honestly and accurately predict a 'bubble' he could toss away his RE license and make 10,0000% more as a financial analyst / investor. As he would be the most sought after man ( or woman ) on the planet
Your scenario is akin to a dog chasing its own tail OP.
A real estate agent could predict a bubble. But it wouldn't be in their interest to tell their buyers that they think it's a bad time to buy.
Most realtors I know are not exceptionally gifted when it comes to financial advice, much less any in depth knowledge of economics that would give them a firm understanding of whether the market was in a bubble or not.
Realtors are salesmen, first and foremost. They know (or they are supposed to) know their product. No different than a car salesman, really. A good realtor knows the local market implicitly, keeping abreast of pricing trends and should be able to judge whether that market is heating up, slowing down, etc. But don't expect them to be able to give you an aggregate picture of the housing market as a whole, across all cities and states. That's just out of their expertise.
most Americans, regardless of their education level, are not gifted at financial advice, at all.
To the extent you feel a salesman is "hey buy THIS, NOW!" then I disagree. To the extent you believe in the principal "to sell is human" - that is, that we almost all are continuously selling ourselves - sure.
And there's very few people in our country whose job is to follow the national housing economy. They get paid a TON of money to draw broad conclusions based on broad evidence. I don't live in Albuquerque, and the housing market there has an infinitesimal effect on any other market outside New Mexico. In NC, where I live - the housing market in Charlotte has little effect on my hometown, and even less effect on towns an hour further.
CA sank into a housing recession in 2005-2006. Where I am, we began seeing the signs - there weren't as many folks moving from CA who could pay cash for a house 3x what they were moving from. And that dampened prices. But our market didn't drop significantly until the credit markets collapsed in Sept 08.
A real estate agent could predict a bubble. But it wouldn't be in their interest to tell their buyers that they think it's a bad time to buy.
but it would be in our client's best interest.
And the reality is that folks will buy and sell homes at every point of the economic cycle. It's a good or bad time to sell. It's almost never been a bad time to buy a home that you're not worried about selling for 5+ years.
New single family starts have been increasing for 8 years. It was at an all time low in 2009 and is now up to a historically average level. But one of the characteristics of being near the top of the cycle is a few years of increasing new single family housing starts. Builders will continue to increase the supply of new houses even after prices peak. Supply increases as demand decreases for a couple of years, pushing prices further down. We aren't there yet. But it looks to be coming up next, where new supply exceeds demand.
^^^ your chart shows about the same bottom in 2009. But that lumps together all residential (apartment buildings, condos and single family) I think that apartment building construction already peaked. I bet that single family starts will increase more and apartment building construction will fall over the next couple years.
So, bubble fans, tell me the top, the bottom, and when they will both be documented on a calendar, and then tell me why people might want to buy or sell or sit it out.
Make it personal and specific, but include 50 states.
Then, stand behind your reasons and advice.
I saw so much predatory stuff, accompanied by, "It's a great time to buy a house!" 7-9 years ago, I don't promote home purchase at all any more. "I help people who have made independent decisions to buy or sell based on their own interpretations of economic trends and their personal wants and needs."
And that perfectly describes my job as a broker.
And, I HAVE told people to sit back, but that is hard for them when they have a pressing current need.
So, bubble fans, tell me the top, the bottom, and when they will both be documented on a calendar, and then tell me why people might want to buy or sell or sit it out.
Make it personal and specific, but include 50 states.
Then, stand behind your reasons and advice.
No one is going to pinpoint the exact dates, not even those who make the best guesses. You can do the research yourself. Study up of the characteristics of a real estate cycle and look at the data both nationally and in your market. It's not that hard to see where we are at the present moment in the cycle and generally what happens after, but I wouldn't try to time it out as to exactly where the next steps will land, just what the next steps are. I just say we are nearing the peak, meaning within a couple years. But not a bubble, just a regular cycle.
If you want to time the market to be a certain point past the peak, then you have to actually wait for signs that it already happened. Rising foreclosure, rising inventory, rising days on market, lowering prices, lower sales volume.
My only prediction is peak of market is within the next 2 years. Bottom will be 5-7 years later. Just guesses based on the past and current markets.
Here in NJ our home sold new in 2004 for $350k. In 2008 it sold for $520k. We purchased it last year for $400k. Even if the house had just kept up with inflation since 2004 it SHOULD be worth over $450k. So here in NJ at least we are far from a bubble.
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Who knows?
