[Ache]

My topic is related to USA soil

My friend wants is seriously looking ahead to buy a house around DC suburbia's -Arlington or FairFax - this coming year. She's been living rent up to now now but her contract is about to finish.

Why are U guys so sure that the Housing Bubble is about to Burst.

As long as you have a population growing on this country due to more immigrants getting into America , house prices can't do nothing but rise.

We have been IN and OUT recession since new century began. How can be another huge recesion in the horizon ?

So the question is ?

Should She wait for the market to crash or what ? Wait for how long ? Or She should keep herself rent ?

Thanks for the raplays

[TorrKing]

Not from the US, but I know a little about it still.

The market is fickle. It is driven by real need as well as expectations. Demand may be "artificial" if people are apeculating in housing because they believe it is an investment, not because of real need, the prices will increase more than what the market really supports. So when the prices have increased sufficiently, people will start selling out to cash out on their investments. Seeing a drop in demand and a corresponding increase in supply, the other speculators may try to exit the market. If this ball starts to roll the prices may plumit in short time.

Real demand may also be affected if people no longer can afford to live there (expensive heating etc..). People will sell out and the prices will decrease.

From what I know the bubble is about to burst many places in the US.

If demand is artificially constructed, immigrants will not fill the gap, no way.

I would wait, I am waiting for the same to happen here. Also, if you see "End of Suburbia" you see another reason why not to buy a house in suburbia.

Torjus Gaaren

[Ache]

I have seen End of Suburbia so many times.

There is no way She can buy a house in Washington DC, prices there go skyrocket.

That's the problem with End of Suburbia. If you move to any major city in USA you have only 2 choices. Living in a ghetto area where your car won't be there next morning or living in a place where prices are just insane.

Roughly speaking, Arlington and Fairfax are about 10 minutes away from Washington DC.

I think the last part in USA where Money Supply would fall is on Washington DC because all the money tax recollected from the rest of the country plus all the big politicians living large .

Again.. thanks for taking your time to read and replay to this post because economy classes at college does not help me too much to figure out this dilema.

[Heineken]

Your friend is WAY too late to the party. She should stay home and keep renting. Then, when prices crash, she'll be in a great position to buy.

Buy stocks low and sell high. Same deal with houses.

[Heineken]

$this->bbcode_second_pass_quote('Ache', 'I') have seen End of Suburbia so many times.

There is no way She can buy a house in Washington DC, prices there go skyrocket.

That's the problem with End of Suburbia. If you move to any major city in USA you have only 2 choices. Living in a ghetto area where your car won't be there next morning or living in a place where prices are just insane.

Roughly speaking, Arlington and Fairfax are about 10 minutes away from Washington DC.

I think the last part in USA where Money Supply would fall is on Washington DC because all the money tax recollected from the rest of the country plus all the big politicians living large .

[TorrKing]

I second that, keep renting and saving. Some pointed out in an other thread that when people go bankrupt or generally have problems with paying their loans, getting new loans at a reasonable cost, will be difficult.

Or go rural. Living on the countryside is the safest in most cases, but is also the least profitable.

Torjus Gaaren

[jaws]

ABOUT to burst? The bubble burst months ago. Now inventory is piling up with no buyers. Here's my advice to your friend: shop around for the house of your dreams, then make an absurdly low offer on it. As it sits on the market long enough, they'll have to take it.

[hull3551]

Although this question has been addressed numerous times in one form or another, here’s my $.02:

I think you need to check a variety of variables. Keep a pulse of the market. I am buying next summer in the Pac NW and see prices leveling off or even decreasing. Keep an eye on the following things:
- Mortgage rates - (www.bankrate.com). They are not dependent upon the fed funds rate, but more so the 10-yr T-note and recently reintroduced 30-yr T-bond. Since the bulk of the economy is tied into the housing market (from jobs to home equity extraction), the fed will do everything in its power to keep rates low to continue the economy moving ahead (albeit somewhat questionably imo).
- Rental prices versus mortgage payments. If there is a huge disparity in these (west coast and east coast primarily), then you may have a bubble.
- Demographics – Baby boomers are beginning to retire, and they will be moving to drive up real estate prices, as many of them still have pensions (for how long is questionable), highly appreciated real estate they are selling, and consequently the ability to continue driving up prices.
- Owner occupied. What percentage are owned, vacant, or rented? Some areas in the SW have high vacancy rates due to flipping, but this seems to be ion the wane, except for the condo market.

I think a bubble burst, if it happens, will be in certain concentrated areas. Miami, Las Vegas, and Phoenix come to mind. DC, SF, LA all seem to have high prices, but this is more due to demand and subsequent housing shortages versus investors.

[Ache]

$this->bbcode_second_pass_quote('Torjus', 'I') second that, keep renting and saving. Some pointed out in an other thread that when people go bankrupt or generally have problems with paying their loans, getting new loans at a reasonable cost, will be difficult.

Or go rural. Living on the countryside is the safest in most cases, but is also the least profitable.

Torjus Gaaren

[jaws]

Here's an informal report on the state of the housing market in the DC area. http://thehousingbubble2.blogspot.com/2 ... tupid.html

Good news for your friend (unless she works in real estate).

[FoxV]

$this->bbcode_second_pass_quote('Ache', 'S')he can't go rural because She is stuck with her job, signed contract for 1 and half more year on the DC area.

[DesertBear2]

$this->bbcode_second_pass_quote('Ache', '
')
She can't go rural because She is stuck with her job, signed contract for 1 and half more year on the DC area.

[Synergist]

I think what we're dealing with here is more than just a housing bubble -- and there is no doubt, it's a bubble.

But my thesis is covert inflation is rampant and that a large part of the increase in housing prices year over year is not speculation, but actual inflation kicking in. Underreported, non-"Core", non-"hedonized" headline inflation.

[DesertBear2]

$this->bbcode_second_pass_quote('Synergist', '
')But my thesis is covert inflation is rampant and that a large part of the increase in housing prices year over year is not speculation, but actual inflation kicking in. Underreported, non-"Core", non-"hedonized" headline inflation.

[Dukat_Reloaded]

Releaste is the thing that Mum&Dad investors can understand and enjoy. The mentality of thinking that releaste is the only investment out there seems to allways be prevelant at one time or another. If you ever seen superman 1 (1978?), Lex made a comment about land "My Father said to me...Son, Stocks might fall and collapase, but people will allways need land, and they'll pay through the teeth for it". It's obvious that is true, people are paying through the teeth, but what happens when everyone owns 3 properties, can't afford the morgage, not enough renters, house price crash. If you want to make money, buy shares and stocks, it's alot cheaper and you avoid alot of taxes and fees such as stamp duty, land taxes, house insurance, property managers and a slew of others.