Monday, July 18, 2005

Bubbles, Bubbles, Toil and Troubles

A cousin of mine just got a plum new job and is thinking of buying a house. When he approached a trusted family friend in the mortgage industry, the broker told him to sit back for a year an continue to rent. A mortgage broker. Told somebody with a really good job to continue renting. Why? Because he perceives that housing prices in that area are unsupportably high and will come crashing down.

This industry professional is not alone. According to a column at MarketWatch, 86% of respondents to a poll see a credit-inspired real estate bubble. Further, "Comments by real estate pros stood out because the housing bubble is likely to be the lead domino triggering a global economic meltdown. Real estate respondents expressed virtually unanimous concerns about this bubble."

At least this column is constructive, though. It does provide sample portfolios to help you get through any bubble-popping-induced recession.

1 comment:

pck said...

i'd be curious to know what the area was. There are certainly select areas - say, boston - that are artificially high.

however, that's not the case across the country...