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Housing Value/Bubble


richjagr

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Is Your House Overvalued?

By DAVID LEONHARDT

Published: May 28, 2005

Four days after Alan Greenspan, the Federal Reserve chairman, pronounced the nation's housing market frothy, a new report on home prices this week suggested that he might have been understating the situation. Even after one of the steepest run-ups on record, home prices have jumped another 15 percent over the last year.

While gleeful about their apparent riches, homeowners in many of the hottest areas are also growing concerned. How, exactly, does one know if the family palace is sitting atop a bubble about to burst?

The answer might have less to do with the sale price of your neighbor's house and more to do with something most homeowners ignore: the local rental market...

...Rents act as a reality check of sorts for home prices, a way to see how economic fundamentals, rather than psychology, are affecting the market. In only a small number of areas - including Washington, Baltimore, Las Vegas, Jacksonville and the Long Island suburbs of New York - are rents rising at a decent clip...

Rest of Article found here:NY Times?

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Very interesting article. The market will have to slow down eventually. I know it's easier than ever to finance a home, but the average american's salary is not increasing by a fraction of the rate housing prices are increasing. Something eventually has to give.

I am currently in graduate school. I will have two great degrees in two very hot industries, but, these industries will more than likely force me to move to an area with a very hot real estate market. With no savings and with significant student loan debt, I'm petrified of my post-graduate housing situation. I know there are flexible financing options, but I don't believe in getting reamed with interest. My point, I guess, is hopefully the market will calm down a little in the next year. We all know that eventually it will.

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