Real Estate

That’s been my worry since I saw the housing bubble peak in 2005. Historically, declines in housing prices take 3-4 years to bottom, which means we still should be at least half a year away. But after that, the economy doesn’t rebound instantly. It yo-yos for a bit - essentially running horizontal.

My theory is that housing prices will continue to wilt as long as large levels of foreclosures and new home inventories run high. These are not traditional homeowners, and are motivated to slash prices, thus continuing to depress prices.

US News and World Report implies (hopes?) we may be nearing a bottom in housing prices but with a mountain of resets coming in the next few months, it’s difficult to see how a bottom can be seen or even predicted.

I will continue to work from Los Angeles while we work on selling our house, which unfortunately is bad timing as housing prices have taken a bit of a dive around here. Once we have things settled over here, we’ll pack our things and move up to Seattle.

We note your concern in the Annual Report about the potential long term economic risks arising from the rise in house prices in response to interest rates and more liberal loan products in the United States. However, much of the increase in housing prices may be the result of regulatory factors, rather than financial market factors.

Should we be surprised inane arguments are concocted out of thin air? No, not at all. The anti-suburban forces have embarked upon an ideological crusade. They do not care a whit about what happens when their policies drive housing prices through the roof. For them, all that matters is aesthetics. The result is that the price of housing, including interest, has been increased over the last 10 years by the equivalent of as much as 10 years household income in Australian urban areas.

Housing prices are comparatively high in Australia and parents struggle to pay their mortgage, this means that people are forced to work much harder than they would like and I think that overall childhood suffers! Kids end up doing lots of daycare and then after school care and parents then compensate by spending more money on extra activities. It’s a worrying trend as I think kids really need a chance just to be kids and families should have plenty of time to enjoy themselves and each other.

Now let’s look at Palo Alto housing prices. Who’s telling the truth: us ever-ebullient Realtors, or the ever-gloomy doomsayers? Turns out there’s a bit of truth in both sides.

A recent CNN/Money article confirms what we've been seeing: Most people still don't believe that there is a housing slump. We see this mostly in terms of sellers who cannot imagine that housing prices have fallen, thus they set their prices too high and properties remain on the market for an extended period of time.

"What some say??" The housing market here is absolutely ridiculous and the Stelmach government refused to impose rent controls making this city and it's ongoing almost 0% vacancy rate unbelievably hostile to low-income and middle-income renters. Buying in this environment is practically out of the question.

Taxes are going down and no one is going to like it. Here’s why, housing prices are going to fall about 50% from where they are now (we can argue this later). Therefore property taxes will be lower. Our roads will not get fixed, our schools will continue to be over crowed, and the primary reason that people moved to South Florida will be gone…great weather…low cost of living! Don’t fear, they will still be available in Florida; however it will be in other parts of Florida.

I spotted this article from the San Diego Union that follows on my blog concerning the failure of lenders to recover adequately on foreclosed properties. If liquidation auctions become an important mainstay of the real estate market going forward, then this will rapidly and decisively feed through to general housing prices.

Belarus’ energy problems are also having an impact on the rest of the economy. Housing prices have doubled as those with extra rubles have put them into hard assets before an anticipated increase in inflation. Utility prices are rising. Consumer prices have grown about twice as much during the first quarter of 2007 as compared to last year.

In many high cost metropolitan areas housing is now consuming 40 to 50% of a family’s net income, a far cry from the conservative 28% which most financial experts suggest. As we are facing a housing led recession, will consumers adjust their spending habits in accordance with declines in home equity? I argue that they will not because of the Duesenberry Effect and the relationship is not a direct one.

(And to be clear: housing prices are going to fall 25% before they start to rebound. That’s the optimistic scenario, as far as I’m concerned. Housing prices must fall, substantially, before everything comes back into balance — there’s not really any way around the Bad Thing)

we have to move house this month. our landlady has decided that she wants to move back into her house, so she gave us notice a few weeks back. other than having to move, the frustrating part is that everything we are finding available for rent is about twice the amount we currently pay. apparently housing prices have skyrocketed over the course of this last year.

Also, "back in the day," the minimum down payment was 10 percent, with most people putting 20 percent down. With today's higher housing prices, 20 percent represents a huge chunk of cash, and zero-down, 100 percent loans are not uncommon.

I’ve been comparing housing prices in various parts of this valley as well as a few random spots around the country. I haven’t found anywhere as high priced as the Hawaiian island of Kauai but then, I didn’t expect prices that high elsewhere.

After echoing many of my comments in a recent post on Mountain View, saying how local housing prices are supported by supply and demand, and Silicon Valley’s ability to reinvent itself to remain a leader in technology development (agriculture, aerospace, semiconductor, PC, internet, biotech, web 2.0), Rodoni went on to prognosticate about the local real estate market in the coming years.

Walked back to the hotel and somehow ended up at a very cute street where I saw lots of amazing looking little houses. I don’t want to even imagine how much they cost, I’d say easily over a million since housing prices here are just ridiculous.

Congress seemed content to let these most dangerous ARMaments proliferate until they were in nearly every American ZIP code. And the bankers responsible for the proliferation of these ARMs throughout America assured us all that ever-rising house prices would keep the fallout from any WMDs to a minimum.

2- Predicting Housing Prices Based on Historic Data Is Doo Doo. from sellsius° real estate blog

Interesting, isn’t it, how financial considerations can influence so many facets of one’s life? In LA, if you have a steep mortage or rent, you may be forced to drive long distances just to pay for it all, whereas in areas with saner housing prices, things are quite a lot more relaxed.

With housing prices being what they are, I’ll take a gamble and say you don’t have enough space. Me either. this is a pretty darn cool coffee table that doubles as a couch.

Yo found only one other Chicago townhouse development with prices below the $300s, at 53rd and Millard in the West Elsdon neighborhood on the Southwest Side (housing prices are generally lower south and southwest of the city). The Arches, developed by Granite Development Corp and designed by Fitzgerald Associates Architects, is located on the site of the former Ida B. Wells and Madden Park housing projects.

Do you want to look into the crystal ball through the eyes of Federal Reserve Chairman, Ben Bernanke? Will that help you predict mortgage rates and housing prices for 2007? I try to outguess the Fed all the time and I’ve decided that we’ll see a significant decline in short-term interest rates by YE2007.

You can look up housing prices, cost of living, income, racial breakdown, commute times, crime rates, and political affiliation. For example, the median price of a home in Brooklyn is $493,000 (twice the national average) and the average household has 2.8 people with an income of $64,000.

The survey measures median incomes for each market and compares them against housing prices to arrive at “median multiple.” The survey considers a home “affordable” if it costs less than three times a household’s gross income.

Here I am thinking the local economy and housing market is healthy, and now I’m seeing ads paid for by Realtors telling me that home prices have gone up too much and that’s not good. I’m confused here, aren’t housing prices supposed to go up? Microsoft, Boeing, and a cast of a hundred start ups are hiring and growing, so by all appearances the local economy doing well enough. Why don’t I see these kinds of ads when I visit California (which would seem to be a more logical place for a housing bubble that might occur)? What’s the real purpose of the ads?

The population growth of California has slowed for the 6th straight year and many people are blaming the high cost of living. How much of an impact could this have on housing prices?

Riverside Mayor Ron Loveridge is also a SCAG board member and was in charge of this report. As he assesses the explosive growth in his area, he makes the point that has always annoyed me about SCAG:

Speculators who drove up housing prices will move on to speculate on something else.

House price expert Henry Slazenger warned the housing Market that house prices are going to go up, down or stay the same price as last month. This will definitely lead to house prices either changing or staying the same. Economic experts queued up to give the same opinions as last month with exactly half of the experts warning of a house market will be depressed and the other half saying the housing market will be buoyant. When asked would this news about house prices effect his Christmas spending celebrated Magician Paul Daniels said "not a lot".

As a result, foreclosures are on the rise. I don’t pretend to know a lot about the economy or the real estate market but I can’t imagine that a huge increase in foreclosures can be good for anyone: many homeowners now have to sell at a loss to avoid foreclosure and will be forced to either rent or buy a smaller home. Those who enter foreclosure run the risk of serious repercussions on their credit report. And a flood of new homes on the market will drive housing prices down… but who is out there to buy?

Say you sell your big home for $600,000 and immediately buy a condo for $300,000, and housing prices drop 10% over the next 12 months, as some economists forecast. In the condo, you would lose just $30,000 on paper; in the house, you would lose $60,000. The condo savings, however, don’t include expenses, which you incur whenever you move.

The mansion itself totals 62,000 square feet (including basement) with nine bedrooms, a ballroom, media room, art gallery and a 4,100-square-foot conservatory. The 6.5-acre property, with 475 feet of ocean frontage, includes two guest houses, a pool and parking for 40 cars.

It will take a few days for the errors to shake out of the MLS, but October’s Market Basket looks pretty weak: Sales down, prices down — but inventories continue their downward trend.

Demand for property now exists in several forms beyond simply having a place to keep your stuff. There are those who speculate in property, those who accumulate property for rentals and others. The wealth-multiplying effect of mortgage interest tax breaks allows individuals with more property to hide more and more wealth while making more and more money - in turn allowing them to increase their consumption of property. Sit on this trend long enough and what happens? Housing prices begin to rise in accordance with demand, pricing lower income individuals out of the market for equity, while simultaneously increasing the equity held by the wealthy.

The grass is greener in West Chesterfield, in part, because it's a neighborhood where people take obvious pride in the appearance of their community. In part it's greener because housing prices (and property taxes) are low enough that residents have some green left over to spend on the landscaping. You can still find a 3 bedroom, bath-and-a-half single family on what's said to be an oversized lot in the $150s, and even late 90s new construction at the Chatham Club can be had for well under $300K.

In one of my recent posts I took up the question about the effect on consumer spending from a rise in housing prices. My source was an article from The Economist, which discussed this topic from a US perspective and in relation with the slowdown of the US economy. In short; given the recent slump in US house prices the stronger correlation between private consumption and fluctuations in house prices the higher the risk of a real US recession. In a US context the consensus seems to be that the effect from rising house prices on private consumption is relative large and that it has been rising. But what about in other countries and regions?

Housing prices and long commute drives are serious problems in Los Angeles (and elsewhere too, of course) that no one really has an answer too. If the freeways are constant parking lots, it doesn’t really matter if you’re driving a beater or a Bentley. The long delayed plans to extend the L.A. subway from midtown to the Westside via light rail has finally gotten the ok because, among other reasons, the formerly balky homeowners associations finally realized, hey, our homes might be worth 2 million but we can’t get anywhere on surface streets during rush hour.

Declines locally will be slim to none and may have occurred already, experts say.

Quite honestly my wondering is outweighed by the notion that there’s really not alot of affordable housing in California anymore, and why I haven’t seen better paying jobs recently. You know honestly that’s who shoulders all the burden for all these crazy housing prices, the employers. My mother does payroll her work and she was telling me about all the hikes in insurance costs for the employers for liability insurance these last few years, it’s almost quadrupled. That’s where all the money for raises, and houses is going.

If housing prices come in at above inflation, they will sustain historical norms. If they don’t, it will be the first time in decades that inflation has outpaced housing. The national median existing-home price for all housing types is expected to grow 2.8 percent this year to $225,900, with the median new-home price rising only 0.2 percent to $241,400.

New evidence of a housing market slowdown emerged Tuesday - growth in the price of a single family home was just 1.17 percent in the second quarter, a decline of more than one percentage point from the prior quarter when prices grew 2.20 percent.

Atrios has a chart of housing prices going back to 1890. The values are all adjusted for inflation, of course. Take a look, and then tell me: do you think the housing boom of recent years is likely to continue?

Here’s how they slice and dice the data - they talk about the “rate” of increase in foreclosures. Not the percentage of people going into foreclosure. This completely ignores the fact that more people own property in the US than ever before.

But, what is a bubble? I guess, as I understand it, a housing bubble is a little like its namesake: an expanding, inflating, fragile sphere that is full of air and susceptable to popping. If the housing bubble pops, housing prices collapse and fall.

Why not open a fund with a 3-5 year lock up, and simply use the money to invest in distressed real estate in California, Florida, Virginia and Washington, D.C. Granted, I believe that housing prices will continue to decrease, but that is why you place the lock-up. Also, the only reason that the people are foreclosing is a one off event, and has little to do with the value of their property. Real estate is not my area of expertise, so please correct me if I am wrong, but doesn't this seem like a profitable long-term investment?

If that is the case, then–gradually–U.S. housing prices deflate, construction and consumer spending fall, and imports drop. U.S.-made products become more competitive at home, and so manufacturing production and employment for domestic uses rises. The falling real value of the dollar leads to an export boom, which causes export manufacturing to boom as well.

Housing prices are going out of control in the DC area, according to a recent Washington Post article (kudos to Paulo). I was told on Sunday that is is “definitely a renter’s market” but even rent prices are inching up. As I’m currently in the market to rent (though I can’t really afford to live alone), this makes me nervous.

last night was one of those rare summer evenings warm enough to walk around in a tshirt and actually feel like you live in california, not some foggy, wind-swept archipelago in patagonia. but then, it is the hottest the earth has been in 2,000 years, so perhaps perchance this portends better weather for sf. but lets hope not, because it's the bad weather that's kept people away and housing prices in the affordable 3/4 of a million dollars range [insert bitter sarcasm].

An economist in Boston, Alan Clayton Matthews, knows a great deal about the Massachusetts economy. Some years ago, we were talking about the story that out-of-sight housing prices were strangling economic growth—i.e. there was a housing shortage. Alan said that worrying about the housing stock per se was the wrong way to think about things. Potential residents—the Creative Class?—weren’t looking for just housing. They were looking for housing in communities with good schools.

All in all, we have similar challenges to other cities of similar size. The gap between the haves and have-nots is too wide and growing (especially with all of the new development increasing housing prices).

A person from Groton asked "why housing prices in MASS are so high, and why we let developers get rich with the Chapter 40B boondoggle?"

Mr. Patrick - There is no silver bullett to solve this problem. "We don't build enough clustered multi-family rental housing."

Because San Francisco is so ludicrously expensive, at 25 I am looking for two to three random roommates to move in with by July 1st. I can’t afford a studio, I can’t afford a one bedroom, and sweet baby jesus I can’t even afford a TWO bedroom with one other roommate. That’s just how ridiculous it is.

From my viewpoint out here in the countryside, I see the two nearest cities, Lacey and Yelm, growing at a great rate. There are new housing developments everywhere as people seek lower housing prices than those in the big city (Seattle) and the local smaller cities seek to increase their tax revenues. But a common worry is that the available supplies of fresh water from aquifers cannot sustain the rapidly growing populations. The cities are thinking about imposing development moratoria and publicly wonder where the drinking water will come from in the future.

For what it’s worth, part of the reason the housing here is so damned expensive is that we got a big influx (as in, about half the population) from California a few years back. These folks came armed with cash and didn’t need to depend on the local economy to buy their homes. Unfortunately for the rest of us, the local economy took one look at housing prices and snorted its drink all over the place. (Isn’t that a lovely picture?)

He also said housing prices affect gangs just like anyone else, with local members moving to the East Bay and the Central Valley for cheaper housing and commuting to the county to sell drugs.

Well if you are in the market for a home here in southern Maryland you better have a winning lottery ticket. Housing prices in the area have gone through the roof. Even in the average blue collar housing developments the prices have become out of reach for the average Pax contractor.This is just one more aspect of the the cost of living growing out of proportion with respect to the wages earned by contractors. The amount of the increase in home prices is well above the nation average. Click on Maryland and see for yourself on this page.

Here is the crux of the problem. Interest rates keep skyrocketing. Why? Our economy is slowing down, housing prices (at least where I live) are slowing…but the rates…the rates just keep climbing. The fed keeps raising them in hopes of reversing inflation. For nearly two years the fed has been hiking rates. Anyone try to buy a house lately? Did you get an interest only loan? Now you are stuck paying whatever the rates demand. Sure it was a great idea two or three years ago when rates were rock bottom, when our economy was showing signs of recovery from the fiasco of the 2000 election. What, you didn’t think there was a correlation? Please.

This is not just a frivilous little tool for fun’s sake. MySociety plans to use this technology to relate housing prices and travel times and calculate travel costs based on constraints of the users. Prices are often not incorporated into the calculations for estimating the model for choice in transportation and I believe, that this may have broader implications for community demographics and housing availability.

But sometimes, it’s just too expensive to put community first. Housing prices have soared throughout the country. But what if we co-owned a multi-unit home, and moved in with friends? What if we committed to living within walking distance to our friends and church?

Despite signs of a slowdown in sales, housing prices are still rising, and more than expected.

Sure the job pays better, but with those housing prices there’s no propertunity.

I have always been of the mind that Massachusetts may be losing population, but that this is mostly due to a soft job market, not because of high housing prices.

San Diego writer who is questioning whether the experts prediction of a 5% pullback in housing prices is accurate.

Even if prices don’t fall, even if there is no housing bubble about to pop, the cooling real estate market will be felt by many of those who may not be thinking about real estate prices. “It’s going to be very similar to the stock bubble, but even more so. Many who didn’t own stock lost their job when the market plummeted,” said Dean Baker, co-director of the Center for Economic and Policy Research, and one of those who believes housing prices have resulted in an asset bubble ripe for a correction.

To make the list, Kiplinger’s says a city had to score well in a variety of areas including housing prices, cost of living, economic vitality, education, health care, the local arts scene and recreational facilities.

Charlottesville is going through a dramatic period of transformation, caused by the region’s quality of life and a general rise in housing prices. This has forced the evolution of the city’s historic neighborhoods, including the Woolen Mills area, just to the east of the downtown mall. In this second in our continuing series on Charlottesville area bloggers, photographer Bill Emory takes us on a tour of the neighborhood. He’s taking a visual inventory of what the area looks like today to make sure it’s still there tomorrow.

Zhou Dunren, deputy director of the Pudong Institute of US Economy, says there “must be something wrong with the housing situation today”. According to his calculation, many citizens have to pay much more than 50% of their monthly income for mortgage payments in order to finance their oversized apartments, a development he calls “consumerism”. He proposes to “slow down”, using a variety of careful measures to allow housing prices to “steadily return to their natural levels”. Shanghai Daily commentator Wang Yanling puts it in a nutshell: “Bigger is not always better”. He fears “unrestricted urban sprawl”. Urban planners, he calculates, often create infrastructure capable of supporting 1 million people in cities which will “attract 500,000 people at most”. Meanwhile, big parks, big squares and big streets are “exactly what a country like China cannot afford”.

In Bill Virgin’s column How to rein in housing prices? It’s simple [SeattlePI], he draws a comparison between keeping gas prices down and housing prices.

With housing prices rising faster than inflation, and college prices rising faster than inflation, and starting salaries rising slower than either, what’s a new graduate to do? Rent until they are 30 to save up for a down payment on a house? That didn’t work for me - student loan payments made sure of that.

Case 1: Housing prices. Studies have indicated that high housing prices are mostly due to regulation restricting supply. And it should be no suprise why. If most voters in a region are homeowners, then they will tend to vote for regulations and officials who will make it hard to build new homes, as this will increase the value of their homes. This is especially true if demand in the area is inelastic, perhaps due to unique features - say: LA, Silicon Valley, Manhattan and Hawaii, which means prospective buyers can’t just substitute homes in other areas.

Exacerbating this trend is the equity line. People have been cashing in on rapidly rising housing prices with 2nd mortgages, often to pay off credit card debt:

Then I spent the rest of the day sorting/folding/putting away laundry, working on another website project, and looking at house listings in Surprise, Arizona. The company I work for is going to be relocating us down to Arizona this summer. They have opened up a new call center in Glendale and so we're looking at houses in the area - cities like Glendale, Surprise, and Peoria. The housing prices there are dramatically different than here in CA (of course) so looking at houses there means they're actually affordable for us unlike the houses here. A nice house out there goes for high 200's to low 300's - which is in our price range. Here in CA (Stockton, for example) that will get you a very old, 2 or 3 bedroom fixer-upper.

Bankrate.com profiles 30 cities that are on analyst's housing buble radar screen. The report segregates the cities into three groups: 10 cities in which housing prices will continue to appreciate, 10 cities that will top out, and 10 cities where prices will deflate.

When people start defaulting on houses in "hot", overpriced markets, housing prices may collapse in those areas. Cheap houses will pour onto the market and depress construction of new housing.

However, we are number 1 in “Purchase Loans Permitting Negative Amortization”. WOOT! #1!

Last week, Bankrate.com unveiled its forecast for the changing real estate market in the U.S. over the next few years - ten markets where housing prices and values will continue to remain strong, ten markets where appreciation will pretty much top out and the ten markets that are most likely to experience a decline. They talked to experts, studied public and private databases, analyzed market trends and examined the analysis of many others.

Housing prices will just continue to rise (but is this true?)

Sometime in the future, this shooting star is going to correct itself. There is no way this can keep going forever. Vancouver is now the 3rd less affordable city in North America to live in. Housing prices has gone up so fast that income can’t keep up. You want to know which Canadian city has the most expensive housing price? I’m living in it. When I brought my first place I felt it was very expensive. Now I think I got a great deal! So I’m not scare to pay some pretty ridiculous prices for real estate at this time because I don’t see prices correcting themselves until about 2009 – 2010. So, for the next few years, I’ll be in buying mode.

Sure LA would be better with less smog (even though we have far, far less than we did 25 years ago. It would be better with less traffic, less crime, and fewer homeless. I'm sure we would be pleased if housing were less expensive, and water more plentiful. But guess what, if all of those things were true, you wouldn't be able to count the constant influx of people who would be driving housing prices up, adding to congestion and smog, etc.

Annette Haddad of the LA Times wrote an interesting article on real estate investors. I’ve had the pleasure of exchanging emails and speaking with Annette and can tell you she knows her stuff. The link is here, but I don’t know how long it’ll stay active. I’ve copied the full article below.

I say narrow-mindedly, because I have had an epiphany. I realize now that it is indeed unfair for sellers to benefit from such a pricing bubble. However, I think the politicians are wrong for looking at oil, since that bubble is only small potatoes. I propose we start with the much bigger bubble: In housing prices. In a time of housing shortages, it pains my heart to Americans profiteering from artificially high prices. Besides, oil companies actually do something useful with their windfall profits, like finding more oil; home sellers will just blow their proceeds on a big screen TV or something.

But like everyone says - the Bay Area is the best place in the world to live! Isn’t it worth giving up living to live here?

A few months ago, he traveled from his Harvard office to the Massachusetts State House, near Boston Common, to discuss with the leaders of the State Legislature a research project he had just completed on the local housing market. Between 1980 and 2000, four of the five cities in the U.S. with the fastest-growing housing prices were in Boston’s metropolitan area: Cambridge, Somerville, Newton and Boston itself. (Palo Alto had the second-fastest-rising prices over that time.) Glaeser and several colleagues considered two explanations.

I’ll add one more wrinkle into the mix. If housing prices level off and the annual rise in value dips below 4%, whose plan would be more beneficial to everyone? Obviously you would have to say Robey’s. If the assessed value isn’t increasing by at least 4%, there is no benefit to Feaga’s tax cut plan whatsoever whereas Robey’s plan would at least provide a concrete lowering in the amount of taxes owed, regardless of the value of the home.

When my sister was in college (PWI) her sociology professor told the class the plan in the Bay Area, but it can be seen everywhere, was for the minorities who had taken over the cities to move out to the suburbs. The plan eventually would see skyrocketing gas prices making it tough for folks to travel back into the city from those suburbs. While minorities were buying in the ‘burbs the white people would buy cheap inner city homes, move back and eventually be back in control of the city. Housing prices in the city would skyrocket making it difficult for minorities to get back in.

Amazing as it sounds, California housing prices continue to climb. Nationwide, housing prices have started to drop but this is not true for California. Californians continue to pay higher prices for the same home. Homes that were built and sold for under $50,000 are now selling for over $300,000.

Next spring, however, investors might finally have a better hedging product. Just in time for the apparent top of the housing market, the Chicago Mercantile Exchange is introducing futures and options on housing prices in 10 cities for the second quarter of 2006.

Earth to editorial board: Spending billions of tax dollars and raising taxes to fund crackpot rail lines does not make housing more affordable. Rather than make it more affordable Rail lines drive housing prices up along the line and increases property sales and payroll taxes to pay for the rail lines. It also diverts transportation funds away from roads where the other 99% of commuters could benefit. Rail does virtually nothing to help traffic, as even the proponents must admit when pressed.

Since the American consumer is nearly tapped out and now that housing prices are no longer relentlessly rising, the last source of disposable income---mortgages---are going to dry up and the cruel necessity of soaking the remaining pennies from the populace will require brutal force.

I suppose you've heard about the high cost of living in Hawaii. The housing prices have sky-rocketed over the past few years, and here's proof:

There is a new real-estate web site called Zillow.com that I really like. It combines market data, google-like earth maps, and MLS information to give a realistic estimate of specific housing prices. And best of all it’s free! (sponsored by ads apparently). I read about it in the NYTimes and decided to put it to the test myself.

The two-day trip presented me with yet another set of choices. I can buy a small three-bedroom house in the town where Eliomar's father lives for about U.S. $12,000. It's a tempting idea. Besides the ridiculously low housing prices the cost of living is about half of what it is in Salvador. We could live there peacefully and Eliomar could open a small business. There's a small video rental store for sale nearby. We'd be far from the madness of Salvador and Eliomar's youngest daughters could live with us.

Las Vegas housing prices continue to increase. The median new-home price was $310,000 at year’s end, up approximately 7 percent from a year earlier. There have been some 7,700 condo conversions, (gutting out old apartments, updating them, & selling them as condos) which have a median price of $185,000 (some actually start as high as $200,000).

I love Durham, NC dearly. It’s affordable, friendly, liberal, racially diverse, ethically diverse, religiously diverse, educationally diverse, kid-friendly, and activist. We’ve even got a science museum up the street, we walk our son to a humanities-enriched public school across a park with a bike trail, and that’s in a neighborhood with housing prices in the low $100Ks, something that Manhattanites would kill for.

Does anyone seriously think that even with housing prices going through the roof, that rent would actually decrease?

Although many places in America suffer from gentrification,* suburbia is the only development type that builds this economic monoculture into each neighborhood. Most of suburbia is separated into chunks of housing units distinguished by cost (and not much else). Subdivisions are separated into houses “from $360,000-$400,000!” or some other narrow price range. This is clearly not a preferred development type at the regional level nor is it desirable type by a growing number of citizens of all ages and types who see the benefit of living in small town neighborhoods like Rolla or even diverse cities like University City. Even the lily-white city of St. Charles has a diverse range of housing prices and is by far the most interesting and culturally rich part of St. Charles County.

So we’ve decided to look for a house this spring, with a tentative move date of no later than July (since that is when our apartment lease is up.) I know we’re a year or two late to the party, since rates have been so great for the last 5 years or so… but life has delayed us until this point, so there’s not much we could have done. Plus we should be able to (still) get a fairly good rate (historically speaking) and housing prices in the Buffalo area are always pretty good, so we should be able to get a lot of house for our money.

Jode’s school (with a good acceptance rate of master’s degree applicants) + low tuition rates for the master’s program + a children’s hospital(for William) + affordable cost of living + along the Route 80 corridor (to drive to California for family visits) + Starbucks (for my employment) + good housing prices(more house for the buck!) + places Jode can work part time (and still attend school) =Nebraska*8 + one cat + one very old hamster.

According to this article in the New York Times, housing prices take up less of a families income, percentage-wise, than in previous generations. I guess they haven’t seen the Denver market where housing prices are up 350% since the mid nineties while incomes are up only around 40%. One of these days something is going to have to give, and I think it is the housing market. Get out while you can!

The Fed also offered an upbeat look at the state’s housing market. At present they see absolutely no evidence of a housing bubble or pending deflation in the housing market. While housing prices soared nationally by 12% in the third quarter of 2005 versus 2004, the Texas market only moved up 5.3%

So, this seems a good built-in mechanism for keeping the population, and thus housing prices, low in the area. But some rich hippies don’t like it:

Still, this peaked my curiosity and I headed over to epodunk.com for some same-sex household statistics. It turns out Laguna Niguel gets a 142 (42% more same-sex households than the US average) and Aliso Viejo (next city over, where the movie was also showing) gets 180 (80% more same-sex households than average). Still, my parents’ city (San Clemente) gets a measly 83 (20% less than average), so it’s not universal for the area. Laguna Beach is a whopping 478 (nearly 5 times the national average), which is actually about the same as San Francisco (479). These are still the suburbs and settled down people though, so it says little about the number of single gay men (for example) that inhabit these places. If I had to guess, I think the high numbers in Aliso Viejo and Laguna Niguel maybe reflect spill over from neighboring Laguna Beach where housing prices are even more astronomical. Get partnered, buy a house in the cheaper burbs over the hills, etc. For my North Carolina readers here are the names and scores of various Triangle cities: Durham (152), Raleigh (106), Chapel Hill (97), Carrboro (117). Seattle garners a respectable 341. I’m a bit surprised that there are so many same sex households in this area. It makes me wonder if this place is a hot bed for Log Cabin Republicans (a gay Republican group for those not in the know). I’ve done searches on dating sites before too and there are WAY more available gay men here than in the Triangle, which I admit still surprises me somewhat. I mean when I was in high school, there was nobody who was out (at least that I knew of) and people were socially quite conservative.

The editorial cartoon shown above, drawn by Ventura County Star's Steve Greenberg represents accurately how many communities are being squeezed by the rising housing prices to the extent that middle-class professionals cannot live in the towns where they work.

I am now trying to decide if I want to sell the house this spring, as housing prices are very high. I do not want to sell too early and rent for a long time before I move, but I also do not want to sell in a declining market. Choices…..

Note, too, that the biggest screams of relief are coming from Allegheny County residents. Outlying areas are not so concerned, although older residents their are also feeling the pinch of inflating housing prices (thank you The Fed, low rates, and flooding the money supply) in the midst of flat income. Elderly: Thank your hero, FDR and mostly democrat Congresses for 50 years in Washington D.C. for creating and then bankrupting what was already a Ponzi scheme from the start. Social Security can’t cover the property tax bill.

Barry Broome, president of the Greater Phoenix Economic Council (GPEC) said he’s starting to see the effect of higher housing prices in the questions and concerns of companies that GPEC is working with on moving to or expanding in the Valley. “It’s affecting what has historically been an advantage in Arizona,” he said. “To have them (housing prices) go up 50 to 80 percent is starting to show up in the analyses companies do on where to locate.”

I watched George Will pathetically spin on This Weak how great this economy is, because housing prices have skyrocketed. But what does he carefully avoid mentioning? That a huge chunk of that appreciation is going directly into consumer debt. So we have a country of homeowners literally betting the farm that they can win the race between bills coming due and the housing market falling.

Most people have been talking about the housing bubble and the impact on house prices. My thoughts on the matter now, is that prices will fall a bit in some areas but I do not foresee a major rollback in prices. If people can not get the price they want for the house and if they can afford to make the house mortgage payments, then they will stay put in the house for now until sales improve.

I’ve been a member of a local business networking group for a couple months now. One of the things I remember recently hearing from the real estate guy was that housing prices in the area are dropping like lead balloons.

I'm sorry, why should the taxpayers pay this kind of money to lure a buisness in? Especially in an area of low unemployment, around 3%. These jobs are going to lure people into an all ready crowded area, driving housing prices further up than they all ready are putting strains on Missoula's transportation situation and adding to the pollution problem that this area experiences every year. The taxpayers pay $20,000 per job for all these benifits.

As far as the conomy goes, Will Franklin reports that state tax rates turn out to be highly corelated with the economy and migration in and out. California, to my surprise is not among the top ten tax collectors. I suspect from the comments that we can thank Prop 13 for keeping property taxes under control. Housing prices probably more than compensate in impact on households but that is speculation on my part.

To understand housing bubbles, it really helps to have lived in Florida where they are continuous. It has been very, very rare to see absolute declines in the value of detached, single family housing. Condos, however, are another story. Condo prices can really crater, as they did in the mid-1970’s and the late 1980’s. The reason why is simple.

There have been articles in several places recently, such as this one at the Volokh Conspiracy that would seem to indicate that housing prices are starting to soften in several formerly hot markets.

Reduced quantity in the face of persistent demand yields intense upward pressure on prices. Given the time required to replace housing inventory, it will take years to replace the lost housing inventory. This impacts housing prices far from the Gulf coast, as displaced families resettle elsewhere. Could it be that the press is intentionally providing misleading coverage of housing market performance out of their fear to admit anything is going well in the U.S.?

Low housing prices and low employment market in the Milwaukee area. Extreme housing prices and not-high-enough-to-make-live-here employment market in the Washington area. Comparing those two statements, it is an easy toss up. Move to Milwaukee, somehow find a job because whatever it is, it’ll still be more in relation to cost of living than the higher paying job out here. But, there is still the little extra employment duration time needed, which mean temporary housing before permanent housing. So, stick it out here for a year or two making a bit more and throwing a chunk away on rent or drive out west and make little and save a little. Guess it all comes back to the point where the land meets sky and what that works out to be. Loving Maryland is going to be hard, if that is what I’ll have to do. Not sure that it’ll ever be possible when it means busting your ass just to pretend to be scraping by.

Are we on the cusp of a drop in housing prices? More and more I'm thinking the answer is yes. Interest rates continue to rise. We've got inflationary pressures in the North American economy, and the US Federal Reserve is likely to continue in the current reasoning. After all, inflation is considered the enemy, and we've got to control it. It seems the weapon of choice continues to be interest rates.

If housing prices do fall, or “readjust downward” in real estate speak, as they must since something like 30% of working folks no longer can even afford a house, that might not be a bad thing. With interest rate hikes, the new bankruptcy law changes and the pending credit card minimum payment hikes due in January, it may be a good idea to wait if you‘re looking to buy.

Even in uncertain economic times like these, history shows that real estate is one of the soundest investments a family can make. During the Great Depression of the 1930s when the stock market plummeted as much as 89 percent, housing prices dropped only 39 percent. So, according to most of the research on housing trends, prices continually stay at the same level as, and most often appreciate faster than the rate of inflation. In fact, the prices of houses actually increased by 10 percent during the economic recessions of the mid-19702 and the early 1980s.

Additionally, in order for a borrower to qualify for a loan, there are debt-to-income ratios that have to be met. The higher the payment, the harder the qualifying. As those ratios rise, they exert negative pressure on housing prices. A $200,000 seller has to reduce his home price by $10,000 to drive the payment at 7% down to where it was at 6.5%. A $150,000 home has to be discounted to $142,500. Per $10,000 of home value, a .5% rise in mortgage interest rates strips $500 off the price of the house. The rise in interest rates from 5.75% in June to 6.25% has cost homeowners $500 for every $10,000 of value in their home.

The item attracting intention from the proposals is the mortgage interest deduction. It is proposed that the tax code convert the home mortgage interest deduction into a credit, while lowering the $1 million limit on mortgages eligible for the tax break to an amount closer to average housing prices, with adjustments for geographical differences. The problem is that an average is not really representative of housing mortgages. Two houses very similar in design and features may have two widely different mortgages depending where they are located in an area as the price is strongly determined by location. So one’s person’s home may be under the limit the other will be over and will lose out. New houses cost more than existing homes as a general rule. So the unintended consequences will be a move away from new larger homes to existing homes located in less expensive neighbourhoods. Needless to say, homeowners and home builder associations are against this change. What politician today wants to remove or change one of the most popular tax deductions?

A drop in housing prices would most likely be coupled with higher interest rates. Assuming home buyer's (especially 1st timers) are strecthing themselves to qualify for a loan at a certain monthly payment, each 1.5% rise in interest rates translates in a 17% reduction in buying power.

Instead, the time is coming to pick up the pieces from “devil may care” investors who bought at market value and can’t pay their loans if the job market changes, interest rates escalate and notes balloon, or housing prices fall.

Subdivisions continue to be built around the valley. Homebuilders remain optimistic but a recent report suggests Las Vegas housing prices may be overvalued by 25 percent.

This evening, I participated in a march from the Pasadena School District admin building to the Pasadena City Council meeting. We hit the major thoroughfares of downtown Pasadena, up Lake Ave and west on Colorado Blvd. There were maybe 75-100 people at the march’s peak, mostly Latinos who are struggling to make ends meet and still live in Pasadena. There were several of us NWN folks who joined in solidarity with our neighbors about these issues in Pasadena. In a nutshell, the public schools suck, are poorly managed and budgets are being cut (with possible school closures). Housing prices are going up and many people are being priced out of our neighborhood (new housing is being built, but 85% of it is “unaffordable housing”). The people who are hurt most by these things are the people who can’t afford to send their kids to private schools, and can’t afford the increased rent. The owners and landlords don’t seem to care, as their kids are being educated and they need to get their investment return. It felt good to join in this march, but it is only the beginning, and marching is not in and of itself going to make any change.

As I've written before, it is unlikely that housing prices will ever come down, though they are likely to level off.

“Traditionally, a Web site is about flipping pages but we took a different approach with Maps which is one page of Javascript,” he said. “Javascript allows rapid development, the end user doesn’t need to install software, and it is cross platform. Maps has a richer interface, like a desktop application.” Last week Google released the Maps service out of beta and re-branded it Google Local and with the release of a free mapping API, there are now “thousands” of Web sites integrating maps for diverse information like housing prices and hurricane tracking.

One change discussed would lower the $1 million limit on mortgages eligible for the interest deduction to an amount closer to average housing prices, with adjustments for geographical differences. The panel also considered converting the current deductions into a credit, among other ideas.

Housing prices in Santa Cruz have almost tripled in the past decade, thanks to a large influx of wealthy individuals, making Santa Cruz unaffordable for normal families. Consequently, school enrollments have decreased and our ability to pay and retain teachers has deteriorated significantly.

Here is the image that comes closer to the data we all wanted for change in housing prices…

The deal sets a precedent as the usual highest housing prices so far has ranged on average between EUR 1500-2000, say experts, as cited by local 24 Hours Daily.

One thing that this recount confirmed about Missoula is that it is a progressive town. John, Lou Ann, and Geoff are all considered progressive Democrats. Engen, it should be noted, is a progressive Democrat who has a lot of support in the business community. Missoula’s progressivism has served it well during its periods of rapid growth. While housing prices are rising, it’s tough to compare Missoula and Bozeman and think that Bozeman’s more free market flair is doing a better job of dealing with the growth.

Experts nationwide warn of a housing bubble which, if burst, could have a significant impact on the American economy as a whole. With housing prices seeing such frantic increases, many residents have been forced to relocate from cities such as San Francisco, Miami, and Boston.

If Joe is selling his house and has one person placing a bid then he may not expect to get too much for it. However, if demand goes up and he gets 20 bids on his house and sells it for double for what he paid for it then should he be investigated. No.

Well, here’s the digest version of some interesting articles regarding the housing bubble many of us find ourselves in.

Banks have pushed up the value of homes since they make more money for selling larger loans. not to mention that they have no risk since they sell the mortgages after they sell them to consumers. the loans they try to sell are risky as you can read below…

Nowhere is this more apparent as in the anti-development activism that is done under the aegis of the environment. And the result has been apparent in housing affordability. The correlation between high immigration states coupled with liberal political power and housing prices is evident. Those of the left like to blame developers as the cause of growth but developers build for the market and it is population growth mostly the result of immigration that drives the demand. If the population is stable then we only need to build new houses to replace those whose useful life is over or for those who want something better. And since those new ones built out of preference for something better would leave another house on the market increasing the supply relative to a stable demand.

The San Francisco Bay area hasn’t fared much better with a year over year increase of just 387 students in that six county region. Apparently children are becoming as unaffordable as our housing prices.

Northwestern Orange County — handy as a commuter’s jump-off for points north, south, and east — has come under pressure for more housing. Most of the housing is single-family detached suburban tract housing, with some standard apartments, townhouses and condominiums in complexes generally separated from the detached houses. But as housing prices have shot through the roof, great pressure has built up to increase the density of the housing.

Many families are attracted to the settlements because of their lower housing prices and proximity to the large cities of Jerusalem and Tel Aviv. Dozens of families uprooted from Gaza this month have been given temporary housing in West Bank settlements, though it remains unclear how many want to remain permanently.

These two factors——low mortgage rates, and the fact that the country has filled up so much that our cars no longer marginalize location costs——go a long way toward explaining the surge in housing prices over the past decade or so. But they don’t go all the way.

The Times looked back on the Greenspan tenure as Federal Reserve Chairman by emphasizing a threatened “housing bubble” that Greenspan doesn’t even believe in. Reporter Edmund L. Andrews characterized a Fed chairman washing his hands of a looming threat. If “housing prices do turn out to be a bubble that bursts,” said Andrews, “Mr. Greenspan will no longer be around to take the blame – or clean up the mess.”

All around LA where the housing prices are a full 80% above the average income, houses have been bought at sky-high rates with “exotic” loans and now the predictions are out in full that in the next few years we’ll see a lot of bankruptcies and foreclosures. Possibly some cheaper housing prices, which will be nice, but this trend of living beyond a person’s means can’t be good, can it?

Do any of you remember the old Wendy's commercial where Clara, the grandmotherly looking lady, demands, "Where's the Beef?" So where's the news here??? The story tries to reason that increases in the GSEs' loan limits PREDICT a still-vital housing market. That's bass-ackwards reasoning in my book. I would argue that loan limits rise because demand HAS BEEN strong and housing prices ALREADY have risen. If you look at it that way, it's a LAGGING indicator, not a leading one. It mirrors the market, not predicts it.

Housing prices here have risen 165 percent during the past decade, making it one of several countries in Europe and elsewhere that have outstripped even the soaring U.S. market.

Problem: You can define the web either to be human readable or machine readable. It is not both. For instance I can present some data as a HTML table. This is presentation. For a user who would like to view this table differently, sort it, slice it, or combine it with data available from another source in one page is impossible. I cannot even have the simplest task of saving this data separately as a comma separated values (CSV) file for my offline analysis. Take the example of comparing housing prices side by side with school ratings, crime database etc so parents can determine which neighborhoods are well suited for their needs and means. Can we do this today? No.

Can we learn from the British? A new article from the AP draws a parallel between the UK housing market in 2004 and the US market in 2005:

As in the United States, British housing prices began a big ascent in the late 1990s, and the gains were dramatic. But after peaking last summer, the market has cooled largely …

Sarasota will have the 4th Community Housing Trust in Florida. We may think we are slow to move but in many ways Sarasota is at the forefront of many issues...

Individuals need to realistically look at their debt commitment. By having high debt payments and a low emergency fund, individuals will face financial difficulties were there to be an illness or loss of job.

I’m so glad that 0% of my income goes toward debit! :D I’m so good.

Skyrocketing housing prices are driving people from San Francisco, Boston and other big cities. Warm weather and more affordable living are behind the rapid growth in midsize cities in Florida, Arizona, Nevada and California. Census Bureau figures show no letup in the migration to the South and West, which are home to all 10 of the fastest-growing cities with at least 100,000 people. Older, industrial cities in the Northeast and Midwest continued to lose residents. Among them were Detroit, Pittsburgh, Cincinnati and Cleveland.

A couple days ago I read a blog entry by Doug K over Forty Years on Two Wheels about what he thinks about inside his helmet while he rides. For some reason that struck a chord with me and over the weekend I was more aware of what I was thinking about then I’d venture I normally am and as I rolled through it all I couldn’t help but think that Doug was dead-on on so many levels. Perhaps the only thing he left out - which might be LA specific - is ‘damn housing prices are out of control’….

The Post Gazette has a great article called “Puts & Calls: It’s your housing bubble and I’m paying for it” that was published on Sunday. Here’s a great clip from the story:

But housing prices being what they are, it seems that most teachers (and there are certainly more than 1,000in the area) certainly could use some help. While I am generally not a big fan of Prince George's County government, this bold step is a positive one. I don't think it is a silver bullet, but getting teachers into the community they serve will only help the community and the education of the kids. In a county which consistently ranks near the bottom of state achievement scores, any step forward is a good one.

Add to that Brooks’ rather apt concept of the Bobo. As the tech sector exploded on Portland’s west-side, between Beaverton and Hillsboro, young professionals flooded the city, buying faux loft-style appartments downtown and turning the Pearl District, once a low-cost district where indie artists started galleries and microbrews set up shop, into a disgusting yuppie hang-out. Similar development along 23rd and 21st Aves. in northwest, Hawthorn and Belmont on the eastside, Woodstock in the southeast, and now Albina and Mississippi Sts. in the traditionally African-American areas of north Portland, have increased housing prices and displaced poor and middle-class families.

Oh, I’ll grant you that housing prices are high. They’re at nosebleed levels in some areas of the country, and still they keep climbing. According to the Federal Reserve Bank of Boston, national median home prices have climbed at an annualized rate of 8.2% from the fourth quarter of 2001 to the fourth quarter of 2004.

Oh, never mind. ABC’s This Week was inexplicable this morning, with Steph first talking to Barney Frank and others about housing prices. He spoke with Republican Representative Walter “Freedom Fries” Jones of North Carolina about pulling our troops out of Iraq. And he talked to Holloywood actor Brad Pitt, who recently split with JenBen and Bono.

I know, I know, it can be a tedious topic but this issue touches all of us. Would you agree that housing prices are a key economic indicator? I assume most agree that they are. Even if you are a renter, housing prices affect you. It’s simple supply and demand. The fewer people that can afford homes means higher demand for rentals. Higher demand equals higher prices.

No wonder housing prices are skyrocketing in California, Arizona and other states…we have millions of people who shouldn’t even be here in the first place, competing for homes against legal residents.

Didier Sornette's and Wei-Xing Zhou's analysis differs from just two years ago, when there was no sign of the faster-than-exponential growth characteristic of a bubble. Their conclusions are strengthened by their successful prediction of a housing bubble in the United Kingdom in 2003, where housing prices began dropping in July 2004. Their analysis is nifty, and the mathematics are simple and straightforward. Soon might be a good time to sell.

Timothy Middleton has a very interesting article on how to limit the damage from significant declines in housing prices. Tim talks about 7 ways to beat a housing bubble. Here are 2 of his points.

Calculated Risk displays a map from the paper showing the bubble states and the non-bubble states. According to the authors, Illinois (along with a good swath of the midwest and south) is a non-bubble state. Of course, there is good reason to be wary any time housing prices get above their fundamentals in large areas of the country. Even in areas where there is presently no bubble, the situation bears watching. There is a frenzied nature to the market in places like California and Florida that is unsettling indeed.

Another indication of a bubble is the growing disconnect between housing prices and rents. One reason demand for housing is so hot is that nearly one quarter of all buyers are investors. They're creating an unprecedented glut of vacancies that is driving rents down. Starting last year, for the first time since the Census Bureau started counting in the 1950s, the share of units that were vacant topped 10 percent annually. As a result, median rent in the United States dropped from $620 last spring to $608 in the first quarter of this year.

My parents are finally looking to move into bigger and better digs. Unfortunately, so is everyone else. Housing prices have ballooned so much that even the Fed is questioning whether they should step in and burst the bubble.

Foreclosure scams are on the rise especially in areas where housing prices have more values than its house loan . The States of Virginia, Maryland and DC have begun looking into cases of foreclosure scams in this area. Typically, scam artists would lure desperate homeowners with promises to pay their overdue loan and rent it back to the owners with the chance of buying the property back. Sounds good, right? But wait a minute, as usual...the devil is on the details.

Housing prices are ballooning in some states. Nevada had the highest price appreciation of 31.2% in the 12-month period, followed by California and Hawaii, with 25.4% and 24.4%, respectively. Texas and Indiana showed the slowest price increases of 3.8% and 4.1%, respectively, Ofheo reported.

The current issue of Fortune magazine has a cover story on real estate speculators getting rich buying and selling houses in rapid succession. None of them seems to have taken to heart the magazine's 2002 cover story, which said: "U.S. housing prices are stretching the outer limits of what's reasonable and sustainable…. In a year or two, prices will fall with a thud."

James Hagerty and Ruth Simon find some people who are certainly acting like they would in a housing bubble. Up until six months ago, I could account for housing prices in terms of scarcity (they aren't building many houses near the California coast any more) and low interest rates. That's getting less possible with each passing day: WSJ.com - As Prices Rise, Homeowners Go Deep in Debt to Buy Real Estate: A year ago, Ryan Epstein and his wife had whittled down the mortgage on their four-bedroom colonial house in North Beach, Md., to $130,000....

Housing prices seem to be rising indefinitely. It seems like there is no better time to be a home owner. However, Paul Krugman at the N.Y. Times is arguing that the housing market is nothing but a speculative bubble that will soon burst. He references a few sources who predicted the Dot-Com bubble burst, who are now predicting that the housing mark bubble will also soon burst. This is terrible news because the largest asset for most people in the U.S. is their house, and alot of people are going to lose alot of money if the housing market suddenly...

There's an article in the Boston Globe today that reports on a prediction by The New England Economic Partnership (NEEP) that housing prices in Massachusetts will decline by 3% by 2007. Based on the near 100% rise in housing cost in metro-Boston over the last ~5 years, I'd say that we could correct a lot more than 3%...but they do have a point when they say that we're heading into a positive economic climate. I dunno....there's no way that I could buy a place that's like my current apartment and expect to pay anywhere near the amount...

In July 2001, Paul McCulley, an economist at Pimco, the giant bond fund, predicted that the Federal Reserve would simply replace one bubble with another. “There is room,” he wrote, “for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism. And I think the Fed has the will to do so, even though political correctness would demand that Mr. Greenspan deny any such thing.”

Interestingly, U.S. homeowners already seem to have an implicit understanding of the importance of the price/rent ratio. The Federal Reserve Bank of San Francisco published a fascinating research study last fall analyzing the fundamental pricing of houses. Using government data, Federal Reserve researchers compared U.S. housing prices to rents going back to 1982, and found that they've generally risen hand in hand--until recently, when home prices rocketed to all-time highs compared with rents. However, what's curious is that the rent component of their study focused on Consumer Price Index data, and this data is estimated at least partially through surveys of homeowners asked to assess what their house would rent for on the open market. So while the debate currently rages in the news media over whether homes are overvalued, U.S. homeowners have already tacitly admitted that homes are overpriced--even if they haven't said it in so many words.

The ones who are really screwed in this scenario are the young homeowners who have gotten themselves locked into "interest only" mortgages. I know a good number of otherwise intelligent people who have these loans, and they are ALL banking on their house's value continuing to rise at 10-15% per year. And when I ask them about their plans if housing prices don't rise so fast (or, god forbid, fall), they just look at me like I'm insane.

I don't think I'm the only one watching housing prices like a hawk and today, there's some good and bad news out there depending on where you want to buy (or sell) in the West. In Montana, Bob Anez reports for the AP that prices are higher than in 20 other states while in Colorado, home prices are 7th highest in the nation.

One of these localities is the peninsula stretching from San Francisco to Silicon Valley, about 30 miles to the south. This is an area where housing prices are more than three times the national average and are rising rapidly. It is not that housing in this area is more grand than elsewhere, but that very ordinary houses have very grand prices. There are communities on the peninsula where the average home price is a million dollars and where it would be hard to find a house that anyone would call a mansion.

And to those folks who thing housing prices can’t fall, just remember the early ’90s. You couldn’t sell your house even if it was in Palo Alto. Oh, and how about Tokyo in the mid ’90s? Property went into free fall.

The Atlanta Fed president added to recent warnings by Fed officials and others about possible regional U.S. housing bubbles. Investors gambling that housing prices will soar indefinitely are likely to be disappointed, he said.

Of course, I'm hypersensitive to this because I've lived through one of these bubbles before. Back in the early 90s, housing prices in California dropped by nearly 30% when our last bubble popped. I personally ended up selling a house I bought for $172,000 for $129,000. It's not impossible for that to happen again.

If you are a first-time homebuyer, the best place to live is in Dorchester. It has a great quality of life, it's convenient to public transportation and major highways, it's close to downtown, and, most importantly, housing prices are low.

A stat Piggington picks up on is the contrast in growth in housing prices verses income and population in San Diego, a 24% growth in price with a 1% growth in income and net out migration is not sustainable. California may be in the Wiley E. Coyote moment after he runs out over the cliff, but hasn't looked down yet. Then again, the web traffic suggests some people are starting to glance down.

I love the city of San Francisco. It’s beautiful, energetic, and dense. It’s a great place for a young man to hang out. But as the article mentions, “[a] two-bedroom, 1,000-square-foot starter home is considered a bargain at $760,000.” This is not the place to raise kids. The problem is finding a politically acceptable way to deflate these ridiculous housing prices. People who’ve invested in homes there are not going to be happy when the house they bought at price X is brought down to its actual market value of...

I've talked alot about China and specifically about the hand-wringing over the question of China's currency. Paul Krugman addresses this today--quite well, I think. He tells, in fairly accessible language for an economist, how the U.S.-China relationship works: China is keeping its currency lower than it should be for a country where investment is flowing like crazy, which makes its goods cheaper in foreign markets. China is financing the U.S. budget deficits (by buying U.S. dollar assets), which has kept U.S. interest rates low, which,...

Perhaps one of the most effected has been Somerville -- once sarcastically referred to as Slumerville -- which has seen a drastic increase in housing prices and economic revitalization in some areas as higher-income folks moved north from Cambridge encouraged by the extension of the Red Line into Davis Square. Long a bastion of working-class Irish and Italian families, the changing face of the city has left many of the people behind as longtime residents see their children and grandchildren forced out by increasingly unaffordable prices. It's a problem that not only hits the pocketbook, but opiate-abuse, related overdoses, and suicide has disproportionately effected teenage working-class whites in Somerville. Obviously it's not easy to draw a direct correlation between changing demographics and these consequences, but an irrefutable sense of desperation has swept across this population.

Essentially, buyers are able to bid up housing prices relative to income because of low interest rates, speculative expectations of future asset appreciation and a little irrational exuberance, too. See Brad DeLong on this, too.

I found a great blog the other day. While it isn't solely focused on real estate, he does have a section devoted to it. Last month the author was writing about the Fenway, but in a wider sense, about construction in the city and supply and demand, overall.

PMI has not predicted how much housing prices might drop, but Leslie Appleton-Young, chief economist for the California Association of Realtors, says any decline will be much smaller than the 20- to 30-percent drop that she said would define a true bubble.

``Do I think housing prices are going to collapse?'' she said. ``No.''

One of the arguments for a permanent increase in housing prices inside the Beltway is the lack of available space. “There’s no place to build any more houses, so prices can’t possibly go down,” is what people say. I’m sure the same reasoning has also been applied to many other metropolitan areas.

It is still true that the farther home buyers range from the District, the cheaper housing prices will be. But Prince William isn't considered as far out as it used to be, according to Amy Ritsko-Warren, spokeswoman for the Northern Virginia Association of Realtors -- and neither are the farthest reaches of Prince George's and Montgomery counties.

Upper Darby is absolutely stuffed with people - moderate housing prices, decent schools, and low crime rates see to that - so it doesn't surprise me to find out that the schools are stuffed as well. Upper Darby is also as multicultural as they come - the graveyard behind me has Greek, Thai, Vietnamese, Irish, and African headstones - so a foreign family of any kind wouldn't have trouble blending in. UDHS cranks out over 800 graduates a year; how they keep track of just the seniors is beyond me.

Housing prices slumped in oil-patch states when crude oil prices collapsed in 1986, he pointed out. Southern California and the Northeast, similarly, had home prices plunge during severe recessions in early 1990 and 1991.

The skyrocketing housing prices are a negative for buyers, the FDIC pointed out, because the typical middle-income family cannot afford to buy a midpriced home in the Las Vegas area.

But the biggest change has occurred in how many people are leaving this state for others, compared with those who settle here from other states. Numerous reports have cited housing prices as a key reason for the exodus.

There have been quite a few articles recently from all over the place talking about an imminent housing crash. As housing prices have continued to grow at record speed, I've begun to believe them. Living in the SF Bay Area, I have seen probably the most dramatic housing boom in the world.

Over the long haul, housing prices will appreciate. However, economic downturns do take place providing different kinds of investment opportunities. Standard and Poor reports on their housing volatility index.

For all of the complaining those of us living in the DC Metropolitan area do about housing prices none of our zip codes made the Forbes Magazine Top 25 Most Expensive Zip Code Slideshow.

Take our living situation. Two people (one in comments and one in email) have suggested we hold onto our house in LA, rent it out till we're ready to buy in New Jersey. It's the sensible thing to do. It's what we should do, in fact. Housing prices continue to skyrocket. Our bungalow has more than doubled in value in the past four years. How can we sell but not buy again right away, knowing that with prices rising 20 to 25% per year, we could easily be priced out of our new local market? We should either buy right away or hold onto what we...

The current housing bubble is the bastard offspring of the stock market bubble of the mid-1990s. Housing prices, especially on the West Coast and in the East's Bos-Wash corridor, began to rocket in the second half of 1995 as dot-com profits were ploughed into real estate. The boom has been sustained by sensationally low mortgage rates, thanks principally to the willingness of China to buy vast amounts of U.S. Treasury bonds despite their low or negative yields. Beijing has been willing to subsidize American mortgage borrowers as the price for keeping...

So, what would happen if the home-mortgage deduction were slowly phased out? For the sectors of the housing market where homeowners tend not to itemize deductions, the impact would probably be minimal. At the higher end, housing prices might be expected to adjust, but not to crash. Consider a home buyer in the 25 percent tax bracket with an 8 percent mortgage. Thanks to the interest deduction, he effectively pays 6 percent on the mortgage. Losing the deduction would have the same effect on his personal finances and mentality as a rise in mortgage...

Now, granted, I haven’t been pricing the NYC real estate market [UPDATE: Tom Negrino has], but to someone watching the escalating L.A. housing prices, that statement lies on the border between hilarious and farce.

There has been a lot of discussions about the housing market recently. Most of the discussions were originated either from people in the industry or journalists. Here is a discussion paper that's been written up about "Why Housing Prices Have Gone Up?" coming from Harvard Institute of Economic Research.

Brad Setser and I have been writing endless papers and blogs (see here for the latest from Brad) about this "balance of financial terror" and argued that the reduction of such foreign financing of our twin deficits would sharply increase US long term interest rate and cause a hard landing for the US and global economy.

"What goes up must come down" applies faultlessly to physical matters. But I have heard every excuse as to why it can't happen to housing prices. Location, short supplies, and "no chance interest rates will ever rise above 6%" have all been used as reasons.

High housing prices in the DC area have shifted, at-most, a few hundred people into living on boats:

Housing prices aren't just skyrocketing in the U.S. In the years 2001-2004, they've risen by $20 trillion in developed countries worldwide.

Want to see something frightening? Type "economist housing prices" into Google. What comes up? How about an economics column in the Christian Science Monitor with this lead:

I have been beating the housing-bubble drum for, ahem, upwards of four years now. I’m a strong believer in “common sense” economics: I didn’t buy the internet hype in the late 90’s (although I had a few “maybe I’m wrong” moments), and similarly I don’t believe the “its a different housing market” arguments now. At some level, housing prices must be tied to incomes. Clearly that relationship has become unhinged. It’s my opinion that the reason that it has become unhinged because of historically low interest rates and the fact that people have moved into increasingly leveraged mortgages. Also lurking in the background is my favorite quasi-federal bugaboo: Fannie Mae. Mortgage backed securities have leveraged the perceived stability of housing mortgages into a lucrative securities market which seems Federally backed. This market has the unfortunate effect of reducing or outright eliminating incentives to lenders to find qualified borrowers: if you are just going to sell the mortgage off as a security, who cares?

Fueled by soaring housing prices, traffic congestion, and new jobs in outlying areas, residents left L.A. at an average net rate of 9,621 per month between July 1, 2003, and last July 1, compared with an average net of 7,373 per month over the three previous years -- a 30 percent increase on average.

Others believe that decades of rent regulation have distorted housing prices and discouraged construction and renovation. The shift can't come soon enough for Peter D. Salins, co-author of "Scarcity by Design: The Legacy of New York City's Housing Policies" (Harvard University Press, 1992).

I would suggest that we’ve never really been through this current scenario, so a profile of past recessions is not particularly relevent. The recent alignment of central bank interventions and other economic factors that is fueling the growth curve in mortgage debt and housing prices has to my knowledge never before appeared in the US, so it would make more sense to study the current...

This is a part of the market everybody should be watching closely. Some people call it a bubble ready to burst. Others – mostly mortgage brokers, real estate agents and construction builders – are confident that any landing will be a soft one. Still other – mostly doomsday sceptics – are calling for a hard landing, the collapse of the credit derivatives market and the eventual bailout by the Fed.

Over roughly the same time period, the Office of Federal Housing Enterprise Oversight reported that Denver housing prices appreciated 4.18% putting us at 47th in the nation. The difference between my estimates and theirs could be attributed to a number of things (e.g. they track selling price, I'm tracking asking price), but for all intents and purposes both measures are saying that the Denver market is pretty slow. I think people here already knew...

This couple mentioned in the SF Chronicle article below lives around Telegraph Ave. and 59th St, just south of the Oakland/Berkeley border, two miles southwest of the UC Berkeley campus. The article says they've lived there since 1994. They probably have quite a bit of equity in the house. The original deal they had with the city subsidized housing program probably required them to share 1/2 of any appreciation...

The news sounds like a broken record, but housing prices in Santa Cruz County are causing many kinds of broken records — the sort that leave local home buyers, mortgage brokers and real estate agents gasping for breath.

He said he worried that the bank's unwillingness to budge - this is the 22nd month without a change in rates - was contributing to a bubble in property prices in some countries. Since 1998, he said, housing prices in Spain and France have risen more than in the United States.

Mr. Trichet described the economic data as mixed, saying it offered no evidence that Europe's fragile economy had gained any traction. He acknowledged that housing prices had risen sharply in a few countries.

In the case of housing, which has a 40% weighting in the CPI, the government does not calculate inflation based on actual housing prices, but on the speculation of homeowners as to the rental value of their homes. When calculating the CPI numbers for housing, the government asks a sampling of homeowners: “If someone were to rent your home today, how much do you think it would rent for?” To calculate housing values based on estimated rents is to disregard the crucial link between housing values and interest rates.

"If housing prices go down or even are flat, heaven help us," said DeFranco.

Federal Reserve Chairman Alan Greenspan has a different point of view. "I do believe it is conceivable we will get some reduction in prices, as we've had in the past," he told a House of Representatives hearing in February. But he added that this wouldn't be a problem, because housing prices had gone up so much, providing homeowners with "a fairly large buffer."

A trenchant analysis of the real estate bubble by The Contrary Investor concludes that This Time It's Different. Usually that is used to justify the continuation of a bubble; in this case it is used to put up warnings about a rise in housing prices even if it is not yet bubblicious. They analyze the current situation against the past thirty years. This is not the largest rise in prices - that happened in the late '70s - but it is the longest rise in real (inflation-adjusted) prices. ...

The average price of a single-family home in Virginia in January was $238,906, up 25 percent from last year's average of $190,768. The median sales price, with half selling for more and half for less, was $146,750, up 9 percent from $134,238 a year ago.

Nationally, the median single-family home price was $188,200 in February, up 9.4 percent from a year earlier.

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.

Both candidates for Virginia Governor this year, Lt. Gov Tim Kaine (D), and former Attorney General Jerry Kilgore (R) have competing plans to deal with problem of the skyrocketing property taxes that voters are paying on their homes. What are the plans?

Meanwhile, new-home sales in February soared by 9.4 percent — the biggest increase since December 2000_ as still-attractive mortgage rates lured buyers, the Commerce Department said in a separate report.

The over-the-month increase boosted sales of new homes to a seasonally adjusted annual rate of 1.2 million. Sales posted solid gains in all parts of the country in February. The pickup comes after sales dropped by 8.6 percent in January as bad weather kept house hunters and prospective buyers indoors.

Home sales, which posted record highs last year, are expected to slow this year as mortgage rates move higher. Still, analysts believe the housing market should remain in good shape.

The median sales price of a new home — where half sell for more and half sell for less — rose to a record high of $230,700 in February.

In most cases, you will come out ahead by sticking to a 30-year payment schedule and investing your extra money in a market-matching index fund.

The statewide median price paid for homes and condominiums in February was $407,000, up 21.1 percent from $336,000 the same month a year ago and up 1.8 percent from $400,000 in January, real estate research firm DataQuick Information Systems said Wednesday.

Sales of new and resale homes in February totaled 41,800, down 1.2 percent from January, but up 3.5 percent from 40,400 the same month a year ago.

Despite some economists' projections, the state's housing market continues to run hot due to low mortgage interest rates, which have made it possible for buyers to qualify for a home loan, and persistent demand for housing, real estate analysts said.

PMI mortgage insurance now refuses to insure more than $350,000 of risk in speculative markets like San Jose/San Francisco.

New house sales plummet 9.2% in January nationwide, while median prices fall 13%.

Speculators now account for 25% of all purchases, and an additional 13% are vacation houses, making market very likely to go into free-fall when they all sell.

This winter's sales volume in Santa Clara County is only 44% of what it was last summer, the worst ratio in at least 10 years. Prices are already down every month for Nov, Dec, Jan, and Feb.

Real estate, the Atlas that carried California to economic well-being in 2004, may no longer be able to support economic recovery, a report warned today, predicting an end to the state's red-hot housing market.

The study, written by the UCLA Anderson Forecast, said the housing sector has been maintaining the California economy, but its current growth path both in building and in prices is "clearly unsustainable." UCLA Anderson issued two reports, one on the U.S., one for California.

Rough times are likely ahead for both the California and U.S. economies, according to the Anderson Forecast. California's real estate market is cooling, the report said, and that could spell the end to California's recovery.

The forecast noted that half of the private-sector jobs created in California in the last two years are connected in some way to real estate. Property values in the last years shot up a jaw-dropping $1.7 trillion, equivalent to about 35 percent of the total personal income in California since 2001.

"Try to get concessions from sellers before you enter serious negotiations," Eldred said.

In a friendly and offhand manner, you might say something like, "Have you thought about a lower price? Have you thought about including the drapes and washer and dryer?" he said. To your surprise, the seller might say yes, but if not, don't push it at this point.

Don't nitpick. Don't walk through the house pointing out flaws or sneering at paint and rugs. Assure the seller that your building inspector also won't nitpick because sellers, especially those with older homes, are afraid of inspections, Benson said.

This approach puts the seller at ease, but do tell the seller upfront that you're aware of obvious serious flaws--an ancient furnace or a leaky roof--and that these will be reflected in your offer. Sellers will be more willing to accommodate on price at the beginning as opposed to being shocked by an inspector's report later on.

For years there has been talk about the end of the typical real estate agent. Internet marketing, 2% brokers, etc. Now, here comes a real threat. Home Depot is testing selling sell your own home kits in seven southern states. The kit itself is no big shakes, but the $12.95 price gets you a listing on Owners.com, which claims to be the largest for-sale-by-owner site with more than 5 million customers.

Spring is right around the corner.

OK, it's about a month off. But the signs are here: longer days, melting snow and sprouting For Sale signs. Don't be surprised if this spring's housing market becomes one of the hottest ever.

Mortgage rates still are very low, making it a good time to buy a home or refinance an older mortgage. Also, many people thinking about buying or refinancing might be spurred to action because they don't want to miss the boat - they know the Federal Reserve is working hard to push rates up, and is sure to succeed sooner or later.

Given today's conditions, which mortgage types look good, and which don't?

Clearly, the traditional fixed-rate mortgage is king. Rates on 30-year loans average around 5.7 percent, or a tad less, depending on which survey you use. By historical standards, that's very low.