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Re: Real Estate Bubble
I have seen and heard a lot of differing theories on the "housing bubble" Some believe it will not burst but may have small leaks here and there. All I know is that when I see the prices of the houses in Southern California I find it amazing that there are enough people that make enough money to afford these houses. I know that in my circle of friends and aquaintences half a million plus for a home is way beyond our means. (In southern California half a million seems to be on the low side and you don't get much house for it.) I had a friend at work(single) showing me the house she was building in Carona, CA. The house is priced at over $800,000. I was like "Do we work for the same company, our pay is the same, (actually I make a little more that she does per hour, but she works more hours than I do) Long story short. She is buying it with her parents and her sister and brother- in- law. I am no expert but I don't see how these prices can be maintained. I think eventually you are going to run out of people who can afford them. In my city however housing has grown at a reasonable metered pace of about 5-10% a year over the past 5 years I don't think this could be considered a bubble however since the beginning of 2005 there seems to be a huge increase. My neighbor started building a home in May, Moved in the 1st part of August, the base price of the house was $179,000. Now the same house base price is $238,000. I am not a math whiz either but I think that is about a 30% increase in around 5 months. (Oh, if you were wondering, I live in Utah. The California information comes because I workout of Southern California.)
I have seen and heard a lot of differing theories on the "housing bubble" Some believe it will not burst but may have small leaks here and there. All I know is that when I see the prices of the houses in Southern California I find it amazing that there are enough people that make enough money to afford these houses. I know that in my circle of friends and aquaintences half a million plus for a home is way beyond our means. (In southern California half a million seems to be on the low side and you don't get much house for it.) I had a friend at work(single) showing me the house she was building in Carona, CA. The house is priced at over $800,000. I was like "Do we work for the same company, our pay is the same, (actually I make a little more that she does per hour, but she works more hours than I do) Long story short. She is buying it with her parents and her sister and brother- in- law. I am no expert but I don't see how these prices can be maintained. I think eventually you are going to run out of people who can afford them. In my city however housing has grown at a reasonable metered pace of about 5-10% a year over the past 5 years I don't think this could be considered a bubble however since the beginning of 2005 there seems to be a huge increase. My neighbor started building a home in May, Moved in the 1st part of August, the base price of the house was $179,000. Now the same house base price is $238,000. I am not a math whiz either but I think that is about a 30% increase in around 5 months. (Oh, if you were wondering, I live in Utah. The California information comes because I workout of Southern California.)
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