[PEN-L:32679] Housing Bubble?

["Ellen Frank" <frank@xxxxxxxxxxxx>]

Here in Boston, where prices have nearly tripled over the past 5
years, my impression is that housing demand is coming
mostly from owner- occupiers. This is in contrast to the bubble
of the late 1980s, when absentee-investors were buying, renting,
then flipping condos like crazy.  Owner-occupiers are far less likely
than absentee-investors to walk away  from a property if they have
financial difficulties.

Also, this boom  -- again at least in Boston, often cited as the city most
likely to be in a real estate  bubble -- hasn't been accompanied by the
massive condo developments that forced banks, in 1990 -1992, to dump
tons of foreclosed properties onto an  already weak market.  So I'm not
convinced the bubble will burst.  On the other hand, I can't figure
out where the incomes are coming from to support these $500,000
mortgages.

Ellen


pen-l@xxxxxxxxxxxxxxxxxxx writes:
>Sabri Oncu wrote:
>
>>Do you have any hard data supporting or refuting the bursting of
>>a housing bubble in the area? Or do you thiink this is just a
>>normal drop in a period of economic hardship?
>
>Most U.S. housing indicators have been strong. New house sales fell
>in Oct, but they'd been rising since February, and are still over 1m
>units at an annual rate. Existing house sales rose strongly in Oct,
>and are well above June levels. Builder indexes are strong, and so is
>mortgage demand. There's talk of saggy prices, like what you recount,
>but the normally cyclical housing market held up very well during the
>recession. This will either be vindicated by a broader recovery soon,
>or it could be a remaining unpopped bubble (like the dollar).
>
>Doug
>