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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.
The Integrity Crowd won't settle for that vagueness.
They believe that I have to pinpoint the curves and dissuade clients, without offering any guidance themselves regarding parameters of unacceptable risks or potential opportunities.
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.
if the area population, employment, and income kept pace, then why wouldn't home prices as well?
there's not a place in America that experienced a "bubble" ( a steep runup in prices followed by a similarly sharp decline) where the prices of homes declined to a bottom for 5-7 years
if the area population, employment, and income kept pace, then why wouldn't home prices as well?
there's not a place in America that experienced a "bubble" ( a steep runup in prices followed by a similarly sharp decline) where the prices of homes declined to a bottom for 5-7 years
he's comparing today to 2004. there were interest only low doc/no doc loans in 2004 and lots of speculation. people doing loans that would have to be refinanced in 5 years after their rates increased, then they couldn't.
there's not a place in America that experienced a "bubble" ( a steep runup in prices followed by a similarly sharp decline) where the prices of homes declined to a bottom for 5-7 years
Phoenix?
Obviously no one can really "confirm" a bubble/peak until after it happens. I think a better title for the OP is "if your realtor thinks there is a bubble (or maybe just peak if you don't want to use the b-word), will they tell you if you ask for their opinion?"
I'm not sure if we even fully corrected from the last bubble. Yeah, I know prices peaked and fell a lot and have gone up from there for a few years.
But look at the historical inflation adjusted housing price chart. For those not familiar, it tracks similar size and quality house prices for comparison over 100 years. For 50 years, from about 1950 to 2000, prices kept to a range of 115 to 145. You can see the bottom of the real estate bubble in 2012, is at about the same point as the prices when previous cycles peaked between 1950-2000.
You can give a rough average of prices for 50 years at 135 on the index. But if you assume the real estate bubble fully deflated and the market is normal, then the new normal housing index is 175. This housing indexed is based on 100 as normal. But lets just go with post 1950.
So from 2000 - 2016, normal housing prices for similar houses on the index are about 30% more than between 1950 and 2000. Why is that?
Some guesses, very low interest rates for many years. Population growth?
^^^ 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.
it all depends how bubbles are defined . i like the more refined definition of a bubble as the point where interest rates and returns on assets have such a wide spread that investors just borrow money6 like there is no tomorrow and dump it in to rapidily appreciating assets .
to be honest most areas have very low demand for money and that is the problem, bank reserves are way to high and demand for loans pretty low .
investors shunned stocks in 1982 because p/e's doubled . it was a bubble they yelled , stay away .
well it turned out that was a big mistake . that was the start of the biggest bull market in history . the big factor was interest rates falling .
it all depends how bubbles are defined . i like the more refined definition of a bubble as the point where interest rates and returns on assets have such a wide spread that investors just borrow money6 like there is no tomorrow and dump it in to rapidily appreciating assets .
to be honest most areas have very low demand for money and that is the problem, bank reserves are way to high and demand for loans pretty low .
investors shunned stocks in 1982 because p/e's doubled . it was a bubble they yelled , stay away .
well it turned out that was a big mistake . that was the start of the biggest bull market in history . the big factor was interest rates falling .
There were no down interest only ARMS during the bubble. Prices were appreciating in the double digits in the coastal markets. So that is definitely a wide spread between interest rates and returns. Basically large appreciation on large amounts of no cost loans. No actual investment even. Only problem is real estate isn't very liquid. And leverage is a big problem when there are losses. No problem though, when you can just walk away.
I know interest rates are low today. How does that apply to this market, regarding investors? I think investors have started to move away from real estate since about a year ago. I haven't done the research yet, but I've read the REITs bought up a lot of the foreclosures. How are they performing now? Will the trusts be dumping their holdings? Or what happens with these trust as real estate prices stagnate and fall? Can the hold on?
Really? They sell houses to put food on the table. You think they are going to tell you if we are headed toward a bubble? Do you trust the guy at the used car lot?
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