Bubble burst
The burst of the housing bubble has been predicted for a while. I think the impetus for it will be the hurricanes combined with the recent Fed Rate hike. Lumber, sheetrock, concrete and other building materials will be in high demand on the Gulf Coast. Also, some housing products are petroleum based (like roofing materials) and will rise as oil prices do. I think we may still be six or so months away from the burst since full-fledge rebuilding hasn’t really started yet. It will also take appraisers a while to recognize the increase in costs, making your existing home worth less on paper.
Anyone tried buying OSB lately? We planned on building this fall. We may have to wait for a few months or a year.
September 28th, 2005 at 9:42 am
All of the reasons you cite are reasons for the value of existing homes to go up. If it costs more to build a new home, then existing homes become more valuable.
I think you mean to say that the new housing market may go into decline as materials prices and interest rates go up.
September 28th, 2005 at 9:45 am
I was going to say what Les said. Now I don’t have to.
September 28th, 2005 at 9:47 am
Problem is the lag in appraisal value. Existing homes won’t ‘go up’ in value right off the bat.
That’s what I meant. Probably should have been more clear. I am speaking in terms of building new homes not already owned homes.
September 28th, 2005 at 9:56 am
Fox already has an article on it:
http://www.foxnews.com/story/0,2933,170527,00.html
September 28th, 2005 at 10:55 am
I don know, If you had an intact, rentable room in New Orleans right now, supply and demand should let you raise prices this story claims that the fedgov is paying 3 times per diem rate. That story sounds strange though, I just heard a radio report saying all those rented cruise ships are mostly half empty.
September 28th, 2005 at 11:13 am
Not sure about down there – though a friend is still doing great business rehabbing old homes in Chattanooga – but up here in NoVA there has barely been a hiccup. Homes that would have had a bidding war of 15 buyers before the open house now have a bidding war of 5 buyers after the open house. In the worst case scenario, a house will stay on the market for 2-3 weeks (except for the guy in the next office who’s house has been on the market for 2 months, but thats only cause he is in a bad neighborhood and was dumb enough to close on a new home and move in before he sold his old one).
September 28th, 2005 at 1:13 pm
Everyone is wrong. The prime rule of Govt says that my house will go UP in value via the local appraissal district, NEVER down. In fact, it won’t even stay even. The RATE of appraissed increase may slow a teeny bit, but it doesn’t matter what happens, even if a meteorite destroys Dallas…my house in Tyler will be appraised at higher and higher numbers forever. Otherwise how will the bureacrats get merit raises?
It’s like gravity! It’s not just a good idea…it’s the LAW.
Bureacracy and govt spending trumps all. Period. Forever. Never changes. More reliable than time and gravity.
September 28th, 2005 at 1:49 pm
Robert: A surefire way to see your property value in Tyler go down is to have a government road project come through your backyard (like the new 49 Loop). Then watch the bureaucrats scramble to find a way to pay you as little as possible for what once was prime rural farmland located a stone’s throw away from a thriving municipality.
September 29th, 2005 at 7:54 am
Are you talking realtor appraisal or tax appraisal? Realtors usually look at what houses in the neighborhood are selling for, and price your home near that. They are much more adaptive to market forces than tax appraisals.
September 29th, 2005 at 2:33 pm
Robert:
My home’s appraised value (in Memphis) went down since last year. It happened to a lot of people here; they re-worked the appraisal formula causing many home appraisals to go down.