24 April 2006

The housing bubble has popped

MSN Money - The housing bubble has popped: "Concerned about his real-estate investment apparently going sour, he can't afford to reduce the price to what homes now sell for in his neighborhood -- which is about $100,000 less than he's asking. Says the salesman: 'If I got in a jam, I would have to drop the price, but I am not at that point.' His game plan: Rent the house, so as not to 'lose my shirt.'

That's the mentality often seen in manic markets -- the belief that you can't possibly lose, and, when the price goes against you, you don't have to deal with it, because it will come back. This fellow (and millions more like him) is going to find out that his belief is a mistaken one, in the same way that folks did when the stock bubble burst. Start investing with $100.
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Dwelling takes a little shelling
The story went on to note that many formerly hot markets in California, Arizona, Washington, D.C., and Florida are now 'languishing without buyers or even prospects. Many once-booming markets are seeing double-digit declines in sales.' The magnitude of the drop in Florida home prices (once the frothiest market in the country) is striking. Single-family home sales declined 20% in February, year-over-year. Similarly, California sales dropped 15%. Some of the hottest towns in those states were off twice as much. "

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