NYT: Steep Rise in Prices for Homes Adds to Worry About a Bubble

[DeepModem Mom]

Steep Rise in Prices for Homes Adds to Worry About a Bubble
By DAVID LEONHARDT
Published: May 25, 2005


Home prices rose more quickly over the last year than at any point since 1980, a national group of Realtors reported yesterday, raising new questions about whether some local housing markets may be turning into bubbles destined to burst.

With mortgage rates still low and job growth accelerating, the real estate market is defying yet another round of predictions that it was on the verge of cooling. The number of homes sold also jumped in April, after having been flat for almost a year.

Nationwide, the median price for sales of existing homes, which does not factor in newly built ones, rose to $206,000 last month, up 15.1 percent over the last year and breaking the $200,000 level for the first time, the National Association of Realtors said. Adjusted for inflation, the median price - the point at which half cost more and half cost less - has increased more than a third since 2000.

"We've had robust markets before," said Maurice J. Veissi, the president of a real estate agency in Miami, who has been a broker for 30 years. "But this one is so much broader and deeper."

Even before this surge, housing prices had risen more steeply over the last 10 years than during any such period since World War II. A growing number of economists worry that real estate is to this decade what technology stocks were to the 1990's, with many people assuming that home values will rise forever....


http://www.nytimes.com/2005/05/25/business/25home.html

[gristy]

1. The thing about bubbles is you never know it's a bubble until it bursts

Almost by definition. That is, if is doesn't (or hasn't) burst, then it isn't a "bubble". You only recognize them after the fact. You can try to "predict" what's going to happen, but no one really knows. Certainly if everyone thought the bubble was going to burst, then it would.

[DeepModem Mom]

2. Adding link to graphic accompanying page-one article --

http://www.nytimes.com/imagepages/2005/05/24/business/20050525_HOME2_GRAPHIC.html

[pokercat999]

3. Three years ago I built a home

on a large lake in North Central VA. Total cost $239K I will be putting it on the market next month Asking Price $477K and I'll be surprised if it doesn't sell within the first month.