Another Housing Bubble?

[GodBlessTheUSA]

I live in the country by choice. I don't want to see what my neighbor is having for breakfast. (joke #1)

I've also been amused at the signs that read "From the Low to Mid 500's". The difference between a $530K and a $560K house is usually the gold plating on the toilet handle. (joke #2)

Lastly, why would anyone overpay by several hundred thousand for a "gated community" that is right next to a bunch of chicken houses? (not a joke, I'm really wondering about that one...)

 

[mattmatt300]

They're throwing up new houses as quickly as they can in our neighborhood and every single one is sold before it's finished. That's in Acworth. Then the houses we looked at in Kennesaw last year are $60,000 more now. It's crazy.

 

[CostaRicaBound]

Until a few months ago, I was VP of Operations for Atlanta's (and the southeast's) most recognized home builder. I left the company for many reasons, one of which was that I did not like the direction which they and most larger builders were heading. It was a complete repeat of what got us into trouble in 2009, same taco different salsa. Further, the homes were being built cheaper and flimsier, but they would push prices as high as they can get away with. Most homes that were selling for $900K were no more than a $300K house wedged into a location that someone wanted badly.

Are we in a housing bubble? Perhaps. One truth that always recurs: unrealistic pricing is certain to autocorrect at some point.

 

[Cadcom]

If they would hurry up and excuse all of this excruciating, unfair student debt then there would be a whole bunch of idiots available to snap up low interest loans for over priced housing. Think of the boom then!

 

[rbstern]

The phony credit this time around is the artificially depressed interest rates. What do you think will happen to both Corporate buying and ARMs when they finally let them go up?

The rates are similar to what they were last time. The difference is, they are actually qualifying applicants, rather than rubber stamping anyone with a pulse.

If there were a genuine shortage, there would be building.

New home construction going on everywhere around me in Gwinnett (Sugarloaf Mills area). Everywhere. Empty lots and partially completed subdivisions that sat idle since 2007 are now getting built, fast. They're mowing down trees left and right to make more space. And they're building them tight. Half million dollar/3000 sq ft. homes on 1/3 acre lots.

 

[rbstern]

We are absolutely in a bubble. Banks have already started floating 5% down mortgages again. It's like 2008 never even happened! Then again, I guess when you can count on a government bailout and nobody loses their golden parachutes, why do anything different?

5% down isn't a problem, if the applicant is qualified and insured. That's been going on for a lot more than the last cycle. The quality of the applications was the problem in the last crisis.

 

[rbstern]

Until a few months ago, I was VP of Operations for Atlanta's (and the southeast's) most recognized home builder. I left the company for many reasons, one of which was that I did not like the direction which they and most larger builders were heading. It was a complete repeat of what got us into trouble in 2009, same taco different salsa. Further, the homes were being built cheaper and flimsier, but they would push prices as high as they can get away with. Most homes that were selling for $900K were no more than a $300K house wedged into a location that someone wanted badly.

Are we in a housing bubble? Perhaps. One truth that always recurs: unrealistic pricing is certain to autocorrect at some point.

If the applicants are qualified and numerous, why are rising prices unrealistic? Do we not live in a market of supply and demand?

 

[CostaRicaBound]

If the applicants are qualified and numerous, why are rising prices unrealistic? Do we not live in a market of supply and demand?

You answered your own question. In supply/demand economics, when demand is high and supply is either low or struggling to keep up, prices escalate. However, when the demand ebbs and supply catches up or surpasses demand, prices correct. Those houses I refer to that sell for such unrealistic prices, are worth significantly less in a lackluster market. Borrowing 90-95% on a home that will decline in value once the market corrects, results in owing more than your house is worth. Sounds too familiar to me.

Most people I know in the trade are getting while the gettin's good. We all know this will not last.

 

[IMaDad]

When I purchased I did so very far below my means and it was definitely the right decision.

If I could go back I would spend more time and purchased a foreclosure for less, and renovated it while I lived in it.

 

[JamesG]

They're throwing up new houses as quickly as they can in our neighborhood and every single one is sold before it's finished. That's in Acworth. Then the houses we looked at in Kennesaw last year are $60,000 more now. It's crazy.

What is different, and scary, is that it is so uneven. Some areas that for whatever reason, demand/speculation prices are going to the Moon, and builders are building, and in other areas.... crickets. Like N. Atlanta vs. S. Atlanta. or... anywhere else in the state. Here in Columbus, there is some, but its mostly commercial and apartments still. While we have literally blighted areas of the city with rows of commercial space for lease and and lots of property for sale.

You can repeat this across the country, where ever the Fed's funny money touches the ground, fantastic prices abound, beyond that, its like its still 2009.

% The Fed.