Do you remember sitting arround in 1999-2000 talking about how the Stock market was going to crash? Do you feel like the same thing is going to happen with Real Estate? You betcha it is.
Now granted, there is a supply and demand issue with housing. There is more demand than supply, this drives prices up. Also interest rates are exceedingly low, that allows someone to buy a more expensive house for the same monthly payment (and studies show that the average consumer doesn’t care about the price, just their monthly expense). Tack on a buying frenzy were you have houses selling at $40K over asking price on the first day they are listed, and you have a receipt for disaster.
What’s going to happen?
- Interest rates will start going back up to controll inflation.
- Mortages will get more expensive.
- People will have to sell their property because they can’t afford it.
- There will be excessive supply on the market, this will drive prices down.
- Banks will start to forclose on property when people cannot afford the mortages and cannot sell their houses.
This will be really, really bad.
Dan Gillmor has more to say and cites another article from the NY Times: Dan Gillmor on Grassroots Journalism, Etc.: Bubble, Bubble, Bubble…
Ahh…Sorry, but this won’t be bad. Some people will get financally killed, true, but some people will finally be able to buy a house at a more reasonable price. You know, to do something truly radical with it, like actually live in the damn thing and raise a family.