housing bubble

There seems to be alot of people that are fear mongers. Whether it's people who on the left like Al Gore who talk about global warming, or people on the right like Glen Beck or Sean Hannity who talk about terrorism, they make it sound like we need to worry about these things none stop. Yes, global warming, and terrorism are very important issues but Manhattan isn't going to be underwater in our lifetime and more people will die in car accidents and of heart disease this month then probably have ever died from terrorism in this country.

The one place where fear mongering is somewhat appropriate is the housing market. Housing prices have been ridiculously going up the last few years. Generally the median price of a home should rise at the same level as the median income. Over the first 5 years of this decade the median price of a home has gone up about 10% a year while median incomes have gone up about 3%. (check out 2nd article below) Some of this is due to being easier to finance homes (mostly lower mortgage rates, ARM teaser loans, etc.) but all things being equal they should go up the same. Most analysts now see a decline in housing prices in 2007. (check out below article) The most optimistic are the NAR (National Association of Realtors) but I would be a little hesitant with them since they depend on the housing market for their well being so they will always try to put a more positive spin. Anyways with housing prices growing astronomically the 1st half of the decade I can’t see them growing over the next 5 years or so. I've been looking into buying a place in the next year or so and I've looked at sales histories of townhouses and condos that I had interest and many of them sold for half of what they are selling for now in 1999 - 2001. To me that was a big turnoff because if something doubled that fast I don't see it appreciating much anytime soon. I'm no fortune teller but I don't see housing prices going up until sometime early in the next decade.

http://money.cnn.com/2007/05/23/real_estate/prediction_big_home_price_drop/index.htm?postversion=2007052413

http://money.cnn.com/2007/08/29/real_estate/housing_costs_strangling_low_income_Americans/index.htm?postversion=2007090310