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Originally Posted by Biggy2
is there really a bubble when the land supply is exhausted, and demand is growing?
Prices may stagnate for a few years, I doubt they'll go down, if anything I think the rise will continue to a point where growth rates stable out again - I'd say we are maybe 18-24 months from that point. I've spoken to many real estate buddies of mine who all say the same thing. Relative to Europe, USA is just catching up.
The mass majority of people today would probably say there will be a bubble burst, and usually the mass majority is wrong.
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Precisely. Though I'm not an economist I'm a realist, an investor and a stakeholder in the stable long term capital growth potential of the real estate market.
4% growth per month is a ridiculous growth rate that is simply a factor of greed agression. However, as Biggy said, it will ultimately be a law of supply and demand. Much of middle America and rural America is has been favor to growth that many urban, heavily populated areas have realized. Trust me, I can tell you from experience that I have property in semi-rural America that has seen no real growth in 5 years.
If you're in a desirable area, I wouldn't sweat the long term stability of your investment but yes it's possible that a correction could normalize pricing slightly. One of the factors I look for when I buy is the income opportunities available in an area, namely the job market. In the NYC metro area, it will be unlikely that there will be a downturn. In semi rural Louisiana I'd be a bit more concerned if you just purchased on inflated values.
Our economy thrives on growth, a down turn in the housing market would be disasterous.