2005/11/05

Housing Bubble: when will it burst?

Here's a good summary of why and when the bubble will burst: "When Will America's Housing Bubble Burst?"

As I've read somewhere else, what value was added to the homes that have gone up in price by 100% or 200% or more? Nothing. Much like the internet bubble of the stock market: the buyers paid the price because the prices were going up. With interest only loans and short term loans, the buyers are on shakier financial ground. The only question is how quickly will the mess be over with (i.e., hit the bottom)?

For those who cannot remember the past, Japan (a land locked country with only about 1/3 land worth developing on) their burst is still going on since the early 1990's (at least 14 years and counting). We have relatives who own property in Japan and they have seen significant drop in value over the past 14, 15 years. Handful of regions in Japan have gone up in price recently but the majority of land is still going under!

I hope it won't take that long for the housing market to hit bottom...