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March 31, 2005
Housing Bubble?
I have sensed that we were in the midst of a bubble in housing for some time now. Most of my experience was anecdotal until a few months ago. I have recently heard stories of people receiving bids on $400,000 and $500,000 properties, condominiums mind you, $80,000 over the asking price. I chalked it up to a hot market (Bay Area) and low interest rates.
But when you attempt to rationalize the empirical evidence, it becomes clearer that things as they currently stand are unsustainable in the short term. The Federal Reserve has been tightening interest rates since June and recently changed their language toward an inflationary bias. This has caused all sorts of negative market reaction.
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Posted on March 31, 2005 11:47 PM by House 78.
Filed in Mortgage Calculator under housing prices.
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