No Real Estate Bubble Bust Yet
The Mind of the Real Estate Investor
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The Nation's hot real estate housing market bubble is not
bursting, but is experiencing a flattening effect after three
strong years of appreciation, according to a survey of real
estate markets throughout America.
"Everybody can't be Donald Trump," said Henry Fishkind, a
Florida economist. "I'd be cautious right now." Fishkind and
other real estate analysts agree, saying the housing market has
peaked in many areas of the nation, and in only some real estate
markets do they see problems in the future.
"Miami is ground zero for the housing bubble," said real estate
consultant Jack Winston. "It's going to be severe in Miami, and
it's going to be problematic in West Palm. We've built too many
units (condominiums) compared to the projections for real
Nearly 81,000 condominium units are under construction or in the
planning stages in the greater Miami metorpolitan area, which
represents the largest boom in Miami's history. Already,
however, real estate agents are reporting price reductions and
some buyers of units have backed-out of deals.
In the Florida panhandle in Panama City Beach more than 5,000
preconstruction condo buyers have either backed out of deals,
forfeiting earnest money deposits or cancelled reservations for
condos all together. Mortgage rates have increased and could hit
seven percent this year, which would be enough to slow the
housing market, according to Fishkind.
The lack of building supplies and higher costs will continue to
effect development for the third year in a row, said Ken
Simonson, chief economist for the Associated General
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Simonson agrees with National Association of Realtors economist
David Lereah, who expects the housing market to decline just 1
to 3 percent during 2006.
Real estate markets have shown signs of change for many months
in some local markets, transitioning from strong sellers markets
to buyers markets.
In the nation's top 20 metropolitan markets housing has
appreciated an average of 79% over the past three years, while
the national average for all markets increased just 32%
nationally, according to National Association of Realtors
The San Francisco Bay area has seen some of the nation's
strongest appreciation. An average home in the greater Bay Area
is now $726,900. That's nearly a seven-fold increase over 1980
New York City's average for a single family home is now
$506,800, twice the national average. Homes in New York have
appreciated 47% in the past three years, setting an all-time
But prices for homes and condominiums in many other places of
the nation remain relatively low. An ailing economy and massive
lay-offs due to business failures have contributed to an average
housing price of just $142,500 in Houston, Texas. Houston's
prices are 30% below the national average.
Kansas City, Missouri housing prices are also well below the
national average. Single family homes in Kansas City average
$257,100, some 20 percent below the average.
Back on the west coast, Los Angeles housing prices were in the
doldrums during the 1990's, but prices have increased an
astounding 66% over the past
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Historically, real estate often...
three years, due in part to pent-up
buyer demand for properties. The average price for a home in the
greater Los Angels metropolitan area is now $474,800.
In Phoenix, Arizona although prices have spurted up 44% in the
past six years, the average cost of a home is still a relatively
affordable, $243,400. Phoenix is one of the fastest growing
cities in the nation.
Back in Miami, the average price of a home is $371,600, which is
80% above the national average. The real estate market was weak
in the greater Miami metropolitan market in the 1990's, but has
been catching-up in the past several years.
Smaller less urban markets have seen housing prices increase
too, but not as significant as urban markets. The price for a
home in Portland, Maine is now $247,200, a modest increase of
just 21% in the past three years.
Real estate economists point to the fact that real estate
markets are local in nature, and no single market is like
another, separated by their own localized regional economy and
That's what Fishkind and many other economists are counting on
to protect the nation's future housing economy from crashing.
The real estate bubble may burst in some local real estate
markets in the next couple of years. Economists seem to be in
agreement on that, but not in all markets.
About the author:
Mike Colpitts is the publisher of Real Estate Add, a consumer
oriented real estate website, which keeps consumers up to date
on local real estate market conditions in all 50 states. Visit
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