Real Estate - Is the boom about to bust?
If you’ve been expecting the boom in American home values to fizzle any day now and you’re convinced that double-digit appreciation rates just can’t keep going, you need to push back your bubble-burst timeline. That’s the upshot of quarterly data on 265 major real estate markets compiled by the Office of Federal Housing Enterprise Oversight (OFHEO), which tracks home pricing changes nationwide. From the first quarter of 2004 through the same period this year, the average home in the United States appreciated by a near-record 12.5 percent.
OFHEO’s chief economist, Patrick Lawler, sees a “potential for declines in some areas” in the latest survey data, especially where there have been exceptional run-ups. David Seiders, chief economist for the National Association of Home Builders, agrees. In fact, so do most mortgage and real estate economists, whose common refrain was summed up recently by Seiders: “This is not sustainable, not at the levels we’ve been seeing,” he said.
High double-digit gains historically never have continued in any market for years on end. Markets will contract, slow down, deflate, correct and, yes, sometimes lose money for the last buyers who purchase at the top of the market hoping to sell and realize a gain. But if you have no need to sell your home in five to seven years, even buyers at the top of the market are safe.
|By J. David Washington|