I heard the Bubble conversation last year when the market was just in it’s relatively normal mode of warmth and now, well now I’m hearing the pundits arriving louder than ever. The thing that’s so interesting to me about it is the people who always claim an escalating market is certainly a huge bubble that’s just about to burst would never in a million years claim that a slow or declining market was a sort of inverse bubble…would they? I mean, in some folks minds real estate values are only supposed to go downward. If they go up it’s a bubble and it’s just about to burst. Every escalating market I’ve ever seen in 22 years has been labeled a bubble and would disappear soon….so they said. If that were really the case, how come I can’t buy a house around here for $150,000 anymore?
First of all, will home prices eventually moderate and will values drop? Yes, of course. That’s just life, prices rise and fall. Before that happens though values are certainly going to go up. A bunch if you ask me. Why you ask? Simply because there’s SO many people around here who want to buy a home. I mean enormous numbers of people! Add to that there really hasn’t been any new construction other than condos and townhouses around here for quite some time and certainly nowhere near enough to satisfy the demand of the folks who want to live here. On top of that the overall population is growing, people are living longer and the Peninsula just flat-out has such a limited amount of space for homes and what you get has to be rising prices. Oh yeah…you also have to add the fact that none of these recent purchases are happening via subprime loans and a very large number are being done with all cash and I think it’s clear that a large percentage of this new price range is here to stay. It seems WAY hard to imagine a rash of foreclosures coming from any of the sales currently happening here in a few years. Most of these deals have at least 30% down!
I don’t know what the future really holds, but if your waiting for a new bubble to burst before you buy a home I think you’re going to be waiting awhile.