Housing Froth

Neve Mind

Naysyers in favor of women buying

Link: Journal Gazette | 01/22/2006 | Author coaches women on buying home.

Never mind the housing bubble. Money coach Vanessa Summers says buying a home is the best investment you can make. She is especially emphatic that single women not miss the boat because they are too often waiting for Mr. Right instead of taking control of their financial future.

But aren’t housing prices inflated right now, especially in the metropolitan areas where many singles live? Isn’t buying a home a huge risk to take alone? And, let’s be honest, if marriage and motherhood are still to come, why plunk down hard-earned savings on a little condo you’ll soon outgrow?

Associated Press goes one-on-one with Summers, author of “Buying Solo: The Single Woman’s Guide to Buying a First Home.” At 34, she’s a former stockbroker and fashion model who now gives financial seminars in Los Angeles.

Cautionary California Tale

Here's a great personal story about people being caught when the bubble bursts.

Link: MONEY Magazine: Real Estate: The state of the bubble - Jan. 19, 2006.

NEW YORK (MONEY Magazine) - Rory Moore, semiretired and a self-described "dabbler" in real estate, bought his neighbor's house in Los Banos, Calif. last May for $499,000. Make a few fixes, he figured, and flip it a couple of months later for a six-figure profit.

But then the property, listed at $699,000 in July, failed to attract even one buyer in the first 30 days.

"I could feel it in my gut that the market was changing," says Moore, 54. "The market had been crazy here, with 25 percent appreciation in a year. I could see the handwriting on the wall." By December, Moore had dropped his asking price twice, to $565,000, and he was dangling incentives like covering a year's worth of gas or utilities and 12 months of lawn service.

He's given up the notion of making a profit on any deal. In fact, he's eager to be rid of the place: "I don't want to get stuck with a property that's a financial drain on the family. We'll do what we have to do to get it sold."

Uh-oh. Signs are a-popping that the era of explosive price gains -- 20 percent to 30 percent annually in some markets -- is kaput for at least the next few years. In the past four months, the median asking price has fallen 5 percent or more in Boston, Cleveland, Los Angeles, Miami, Phoenix and Washington, D.C., reports blogger Ben Engebreth's Housing Tracker website, which compiles weekly data on 49 cities.

Charlotte Observer | 01/14/2006 | 11,000 Dow cooling of housing, bonds = rebound for stocks

This is part of what Greenspan meant when he coined "housing froth". In a frothy world, bubbles form in one spot and burst in others. The housing market bubble popping is leading to a re-bubble on the stock market.

Link: Charlotte Observer | 01/14/2006 | 11,000 Dow   cooling of housing, bonds = rebound for stocks.

"We've already seen individual investors showing some signs of interest in the fourth quarter, and something like Dow 11,000 just increases that interest," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia.

Since the dot-com bubble burst in 2000-01, the housing market has taken off. The number of home sales climbed steadily since 2001. And while the Dow eventually fell to 7,286.27 on Oct. 9, 2002, home prices have doubled or even tripled in some areas, such as New York, San Francisco and southern California.

OverZellSupply

Here's what Zell hs to say:

Link: Latest Business News and Financial Information | Reuters.com.

CHICAGO (Reuters) - The risk of a housing bubble in the U.S. market is highly localized as supply is still catching up with demand in most of the country, U.S. real estate magnate Sam Zell said on Thursday.

 

"There will be a softer real estate market in some areas as a result, but I keep telling people there is no bubble," Zell told Reuters after an economic conference in Chicago. "The fact remains that even with the gains of the past five years, American residential real estate prices in relative terms are among the cheapest in the world."

If You're Not Selling, There's No Bubble

Scott Burns of the Universal Press Syndicate brings up a pretty good point: if you're not selling, and you are living, you've got nothing to worry about. Just live.

Chron.com | Burns: Own your home, ignore the bubble.

Failing to make that distinction — between your house as where you live and as a price — is one of the reasons so many people are worried about a housing bubble. It's also the reason some financial advisers (or salespeople) are telling us homeowners that the return on home equity is zero and we should borrow against our equity to make it "productive."

That's junk economics.

Housing Normalcy in Baltimore

Seems Baltiomore thinks things are just plain normal, not bubble-licious.

Link: Home sales level down in area - baltimoresun.com.

The frenzy of homebuyers willing to outbid each other to get into a new home became a rarer phenomenon, yielding to more stable sales prices, more leisurely shopping and nearly twice as many homes on the market as there were a year earlier.

The experts say the journey from overheated to a more normal market probably began around September, although it wasn't clear at the time. So while Realtors generally predict another year of healthy sales in the Baltimore region, most agree there is an unmistakable hiss in the market.

Housing Bubble Lessons from our Friends in Shanghai

There's an awful lot we can learn about how to spot a housing bubble from our friends in China.

Link: A Home Boom Busts - Los Angeles Times.

SHANGHAI — American homeowners wondering what follows a housing bubble can look to China's largest city.

Once one of the hottest markets in the world, sales of homes have virtually halted in some areas of Shanghai, prompting developers to slash prices and real estate brokerages to shutter thousands of offices.

For the first time, homeowners here are learning what it means to have an upside-down mortgage — when the value of a home falls below the amount of debt on the property. Recent home buyers are suing to get their money back. Banks are fretting about a wave of default loans.

Housing Bubble News

Chicago Sun-Times - Classifieds - Real Estate Transfers

This is a great resource for checking actual home closing price data.

Compare the closing prices for recent home purchases in the seven-county Chicago area.

Link: Chicago Sun-Times - Classifieds - Real Estate Transfers.

Froth on Flickr

Here's a look at all of the most recent photos tagged with "froth" on Flickr: