Quote:
Originally posted by Moses
I think if you live in stable but unremarkable community the prices will be pretty solid. The problem is the price of houses in the white-hot areas like the bay area and coastal southern California. Quite simply, the price of homes has outpaced the wage profile of the vast majority of homeowners. What kind of income do you need to get into a million dollar fixer-upper starter home? It's absurd. In response to the housing market rocketing beyond the "normal" families grasp, the markets have responded with equity plus loans, interest only loans and other ill advised policys. The real estate market is walking a tightrope...while keeping a dozen plates spinning in the air. At some point it will all come crashing down and the margin players will get hurt.
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Absolutely right.
Remember too that in this era of globalization many investors in really hot markets are financial investors - investors who buy solely for the anticipated appreciation (referred to in Waynes original definition).
These are often offshore investors (both individuals and funds etc) who will sell their investment at the first sign of less-than-anticipated returns. When that plug is pulled the bubble will truly burst - certainly in this town.