The Real Estate Puzzle

[PrincessFiona]

I was having an interesting talk with Kelly on Monday about the low interest rates and how they are helping the real estate market in particular. It seems that at least in the area that we live people are moving and refinancing at much lower costs...I was listening later to a news broadcast though that was talking about the fact that this might not be a good time to buy a home. I hadn't thought about this, but apparently because interest rates are low, home prices are inflated....and people may not be able to get the money back out of their investments....Has anyone else heard anything about this?

kris

I've heard that can be true for some parts of the country but I think it depends on the market you live in. Some parts of the country would be more susceptable to this than others.

I'm editing my post to put in this link. Not that this is the only opinion on the subject, but it makes sense to me. Read in a little bit to get to specifics of a real estate "bubble" and how to judge that by local markets.
http://yahoo.smartmoney.com/theproshop/ ... y=20030630

[Meenah]

I haven't a clue!!!!!
Luanne

[JaneDoe]

It's interesting that you raised this topic. Last night, we ran into our real estate agent who assisted us in buying our home a year ago. She was saying that in our area (not a big city) it was a huge sellers market this past spring! Apparently, there were not enough houses listed relative to interested buyers. So, sellers were getting above asking price for the sales of their homes. Our real estate agent said that buyers had no choice but to buy at these inflated prices, and she anticipates that the prices of home will go down in the next year. I guess this type of phenomenon is unusual in our area. She hopes that those who bought homes this past spring will not have to sell their homes soon because she does not expect that they will break even. She thought that the low interest were partly to blame for this.

We were lucky since were bought our home prior to this happening. But, it does concern me that she mentioned that there may be a "correction" in our local market in the near future. Although we don't plan to sell our home too soon, we expect that once my husband finishes his residency in 3 years we will be selling our home. Hopefully, our local real estate market will have "corrected" itself by then.

[Michele]

Being a recent buyer, the low interest rates definitely made it easier for us to afford a mortgage payment, but yes we did have to bid up on every house! Gainesville is notoriously a seller's market though, so my area is a little biasing...and we have a constant influx of people so we don't really experience a false inflation of home prices. Many areas are going to drop, probably drastically in some areas, soon...after the interest rates come back up. But we bid higher on our townhome...and it was only on the market for 3 hours when we put our offer in (it already had 2 other offers on it as well). Gainesville as a whole has experienced a huge increase in property values in the last 3 or 4 years... over 20% per year in some areas!

Michele