Some Bubbles are just Good Enough

About this housing bubble (via The Big Picture), David Sucher asks, should you buy or sell? That’s a very good question, and I tend to agree with his analysis, for the most part.

The prices do reflect the lack of supply and an increase in demand, and the supply is not increasing as fast as the demand is. However, I tend to think, just from watching the market, that the inflated prices in some parts of the New York metropolitan area are side-effects of the reduced supply elsewhere. That is, the price of my house is higher not simply because the demand for my house is higher, but because the demand for houses in the general area is higher, and that demand is due to several factors, not the least of which is the limited supply of houses in walkable neighborhoods. What happens is that customers look for a home in a specific area, find that properties are unavailable or that prices are too high for them, and then look in the next town over. They see that prices are rising, and fear that if they don’t buy now, the house will be even further out of reach tomorrow, and so settle for a different location. Oh, the house’s amenities are nice, but instead of a 30 minute commute, now it’s an hour.

One day the buyers will become patient, refuse to pay, and demand at the outer limits will begin to fall. If you’re speculating, I suggest Hedge Street, via Curbed.

2 Replies to “Some Bubbles are just Good Enough”

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  2. I certainly think at some point here in the near future we are in for an adjustment. In some parts of the country we are already seeing the beginning of this. The hot Arizona Real Estate market has slowed down a bit where houses instead of selling before they are even on the market are now up for a month or more. As the prices have gone up, the demand is going down. Supply is still down though which is helping sustain the current price levels. You are certainly right about people moving further just to try to afford and “panic” buying is certainly happening.

    Mesa Real Estate
    Boca Raton Real Estate

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