Reply to Is there another "housing bubble"?

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Reply to "Is there another "housing bubble"?"

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[quote=Anonymous]No.  The housing bubble from 2006-2008 was not caused by real estate that was inflated in price.  It was caused by shady financing including zero down mortgages, interest only mortgages, adjustable rate mortgages, etc that allowed people without the financial stability to buy a house, to buy real estate.  These people did not create any equity.  Essentially they were renting from the banks.  But when the mortgages adjusted, then these people could no longer afford to pay the mortgage on the house and with no equity, they could not sell the house for a loss, whether modest or not.

In this case, real estate prices are inflated, but they are being inflated by market forces not fictitious financing.  In this case, the influx of higher income wage earners into the DC metro area are causing a flood of people with financial means to be looking for real estate.  There are people who have money, but no place to live.  And when you have more buyers than housing stock, then prices rise.  We have a constant rise of population in the DC metro area and a disproportionate number of higher earners (those with HHI over $200K) who can afford homes.  There is a lack of housing stock.  So prices rise.  But in addition, this is also fueling flippers.  Flippers are taking homes in good areas which have not  been cared for and they are renovating and reselling to the hordes of buyers who are waiting for more expensive housing stock.  Yes, it is taking housing stock away from middle class buyers to give to UMC and rich folks, but that's where the money is.

This market is not going to reset more than a small correction because there are still far too many people with good incomes who are waiting to buy houses in the right areas.[/quote]

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