Wednesday, July 13, 2005

Sure Looks Like A Property Bubble

Q: How much would you pay for this lovely piece of property:
  • It has an attached car park, a small patio, marble floors and a pantry.
  • Two bedrooms and two bathrooms.
  • Located in lovely Malibu, CA with an ocean view on one side and a view of the mountains on the other side.
  • Located in a gated and guarded community.
  • Caveat: It's a trailer. You don't own the land but hey, it has wheels and so you could move it to some other yuppie town, say, oh, I don't know, maybe...Marin?
A: It's a bargain at only $1.4 million!

This is insanity. How can otherwise intelligent, reasonable people with straight faces actually deny the existence of a real estate bubble in California?

Well, at least this article ends with sane words:
"The main worry simply is that prices have climbed too fast for too long in both countries [Canada being the other country]. Real estate executives say the market tends to go in seven-year cycles. If so, we're three years overdue for a correction. All real estate pros will deny the market is overheated -- there's never a bad time to buy. Privately, though, some admit they would rent rather than buy if they were first-time buyers. [Emphasis is mine.]

In the end, the market will live or die on interest rates. In the United States, with so many owners holding so little equity, a spike in mortgage rates could clobber the market. In Britain and in Australia, house prices have flattened and are starting to fall. A downturn in the United States could easily trigger a downturn in Canada. It's coming and if you don't believe it, go shop for a trailer home in California."

0 Comments:

Post a Comment

Links to this post:

Create a Link

<< Home

Terms of Use: The purpose of the Marin Real Estate Bubble weblog (located at URL http://marinrealestatebubble.blogspot.com/ and henceforth referred to as “MREB” or “this site”) is to present and discuss information relating to real estate and the real estate industry in general (locally, state-wide, nationally, and internationally) as it pertains to the thesis that recent real estate related activity is properly characterized as a “speculative mania” or a “bubble”. MREB is a non-profit, community site that depends on community participation and feedback. While MREB administrators do strive to confirm all information presented here and qualify all doubtful items, the information presented at MREB is neither definitive nor should it be construed as professional advice. All information published on MREB is provided “as is” without warranty of any kind and the administrators of this site shall not be liable for any direct or indirect damages arising out of use of this site. This site is moderated by MREB administrators and the MREB administrators reserve the right to edit, remove, or refuse postings that are off-topic, defamatory, libelous, offensive, or otherwise deemed inappropriate by MREB administrators. You should consult a finance professional before making any decisions based on information found on this site.

The contributors to this site may, from time to time, hold short (or long) positions in mentioned and related companies.