Quote:
Originally Posted by AFireInside
I think you are right. The conditions were right in 2007. I think it would have burst in 2008 if the interest rates weren't lowered. There will be a correction, however it will be more drawn out because of government interference with the interest rates. Will it pop? I don't think so. But I do think you will end up with at the same place with housing prices, whether there is a bubble or not.
If the bubble would have popped in 2007, I think you would have ended up at point A for housing prices within a year or two. Now I think you will eventually end up at point A, but it will likely take several years.
The market will regulate itself, by lowering interest rates, the government encouraged people to buy, it will just draw out and delay any correction. While numbers may not have increased at that point compared to 2007, had the government not lowered interest rates, it would have been a much much larger decline at that point.
I don't know, just my opinion.... People who own, or affiliated with the real estate industry, or even the financial industry, tend to have bias, because a major decline in housing prices hurts their business.
Those who can't afford a house right now are biased because they want prices to come down. No one is going to sway the other side...
Almost everything I'm seeing points to a pretty significant correction right now. Call it a bubble, call it a correction, it is what it is. Thats RIGHT NOW though, this could all change within months.....
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You couldn't have said it any better and my thoughts exactly.
Call it a bubble or correction but it'll happen. When stocks crash, it's quick because of liquidity. Real estate crashes are more gradual but can be just as severe. When the market is in tough it can take months to sell your place and often at a steep discount. Rates are at record lows and can only go up. Rates might not increase quickly but instead of the balloon popping right away it's slowly running out of air. The end result will be the same
Low interest rates after 9/11 gave way to cheap money and when the recession happened rates continued to stay low prolonging the inevitable. Currently house prices are anywhere from 4.7 to 11.3 times median income. Historicaly, it's in the 3-4 range. From 1997 to 2007, houses rose 200%. A lot of people are over their head and unfortunately it's not going to end well.