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Headed for a housing bubble?

By Judy Martel · Bankrate.com
Monday, July 8, 2013
Posted: 6 am ET

Soaring home prices, lack of inventory and bidding wars in parts of the country are prompting some analysts and investors to start using the B-word again: bubble.

Fears that prices are rising too far, too fast have led to predictions that the market won't be sustainable. "Prices in some areas are just out of control," Scott Tamkin with Keller Williams Realty in Los Angeles told CNBC. "As soon as a good property comes on the market at a reasonable price, bam! It's gone in multiple offers, oftentimes in cash," he said.

Rick Sharga, executive vice president at Carrington Mortgage Holdings in Santa Ana, Calif., reported similar experiences in a previous interview. In parts of California, he estimates, 70 percent of the homes sold have multiple bids.

In markets such as Phoenix, Las Vegas, Los Angeles and parts of Florida, where prices plummeted during the housing bust, a lack of inventory and high investor activity has driven up home prices as buyers compete for the few properties on the market.

Meanwhile, the party appears to be ending for housing stocks, hampered by expectations of rising mortgage interest rates. In June, the index that measures housing stocks marked the largest drop in a year. The major building companies, including DR Horton, Pulte, Lennar, and Ryland, all saw losses after performing well over the past year.

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26 Comments
Rich
July 09, 2013 at 10:56 am

Cash is king.. Don't expect Lending Companies to be ready to give out loans like they did just a few years ago. The lending process is more stringent now, and the average buyer will find himself waiting for an answer by the lending company. Just wait until the appraisal comes in lower than the asking price.

Jack
July 09, 2013 at 10:44 am

Soaring home prices?? Where?? Not where I live. My home value is still down 20% over what I paid for it in 2006. There is no bubble where I live.

steve surman
July 09, 2013 at 10:42 am

FYI the banks are also contributing to the rise in housing prices because they are sitting on properties and not putting them up for sale till the market comes all the way back.How do ,I no this you ask?.I have two house,s directly next to me that are forclosures 1 has been empty for 4 years and the other 2 years and they are not for sale so the banks are artificially inflating the prices of houses.This in my opinoin is criminal.

cin
July 09, 2013 at 9:23 am

I am very circumspect over the veracity of this article. In my area(suburbs of Philadelphia) which is considered a rather affluent region with superb schools and amenities, the homes in the price range of upper 400s to millions are simply not moving. Realtors are SALES PEOPLE so caution when you read this. Some realtors use this ploy to move houses. Keep in mind that home prices are still 30-40% below value, so I don't see anything close to a bubble. More like price them low and watch them go. Ha! Even that's not pushing home sales. Just more sales hype!!

Nostromo
July 09, 2013 at 8:35 am

D@mn lemming-like populace's going to fall for it all over again.

RK Peatross
July 09, 2013 at 7:34 am

Aaron--back in the day my roommates and I sued our landlord after he refused to give us our deposit back. He said we did all kinds of damage to the house and brought in his "maintence man" to testify. During cross examination, I asked this dude if he was a licensed by the state and he wasn't. Judge ruled in our favor. Peace out holmes.

Dianne
July 09, 2013 at 5:06 am

To Aaron: I'm not sure if you can do this, but can you take your ex-landlady to small claims court? If the amount is too large, you can sue her for $1,000 at separate times. I know too well about people like your landlady. They love to rip off people. I used to write down every little ding on a sheet of paper so that I had a record of it. You could also have your new landlady initial it as well. Pictures wouldn't hurt either. That's why I don't rent anymore. Landlords treat you like dirt. They won't upgrade their properties. Kitchens, bathrooms and carpeting from the 1960's. Unbelievable.
In one place, I left it immaculate but they wouldn't return our deposit because we didn't have the carpet shampooed! The carpet was clean! Another place, I left it immaculate but the landlord wouldn't return my deposit until I took all the curtains to a dry cleaner! It's the rich taking advantage of the poor. I agree with Karma. But in the meantime, save your $$, get a reputable realtor and buy your own place.

Larry
July 09, 2013 at 4:20 am

Couple of Idiot respones in front of me. I am a licensed realtor in illinois since 1986. The market here in the chicago area has improved but has not jumped through the roof on prices as suggested in this article. I expected the market to have a large spike up initially because the market over tanked. Now, I expect the market to be slow and steady up for the next 5-8 years. Similar to the recovery after the early 80's debacle of high interest rates.

Aaron
July 09, 2013 at 4:07 am

I agree with Jeff, notice in the story how it's the "high investor activity" that is driving this bubble. The average guy hasn't been sitting around with a half a million bucks in their bank accounts. It's the rich investor buying up these available properties so they can rent them out at 2/3 of their tenants income like I've been paying for the last ten years here in California. Our family just moved a few months ago after receiving our notice of eviction (no reason given, which is legal), we always paid our rent on the 1st, and the landlord refused to return any of our $3000 damage deposit saying all kinds of excuses why she didn't have to. Then she completely renovated the apartment and moved in there herself. That place was spotless when we moved out but she is so greedy that she doesn't care what would be fair unless court ordered by a judge. I don't want to fight about it, it's probably not worth it and I feel like Karma will avenge me. Her brand new air conditioner already fell out of her window because the window frame was rotten with termites. I hope these type of investors lose their shirts and end up in my shoes for a while.

Jeff
July 09, 2013 at 2:27 am

You know, I am soooo sick and tired of greed. I hope they run the prices sky high, and then it crashes into the basement. And I hope it takes generations for the market to recover. It would serve them right.

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