Things are always the 'rosiest' at the end of the road. And prices always rise the most and the fastest at the end of "bubble" (trend). See Nasdaq.

Of course this time it's different, right?


Bob

For the market I'm in, it is. Here (Florida's Tampa Bay area) the prices will level off for a while and appreciation will slow for a little while, but a beach condo isn't going to sink, or 'pop', from $700,000 to the $141,000 price it sold for in 1995, which is what the Bubble Theory suggests. However, it might take a little longer than 6 months to go up to $800,000, or it may not.

Tampa Bay has been a Seller's market for quite sometime, as many people love to move here or buy vacation homes or condos here, or investment property for vacationers to rent.

What the Bubble Theory suggests is that real estate prices, like stocks, are across the board, but they're not. Each market is different, from state to state, to city to city, to block to block.

When new construction starts to slow, and it keeps on going in my area of the country, you know the real estate market is about to slow down. When supply is scarce and demand is high, prices continue to go up, which is what's happening in housing. Remember, the stock bubble occurred because CEOs cooked books, creating bubbles, false values, by being dishonest. That is not what's happening in real estate.

Real estate has always appreciated, and it will continue to do so, although sometimes more quickly than others.

Mr. Real Estate makes a good point: real estate markets do not appreciate or decline at the same rate. In New York city, or San Francisco, buyers may be facing drastic declines in the even of a broad based, interest rate driven event because they have enjoyed such dramatic growth over the last five years (as investors perhaps saw NASDAQ).
Nonetheless, in other parts of the country, such as Chicago, which did not grow at the same rates as either coast, the decline isn't likely to be that great. I follow the Chicago market in diannah.blogspot.com, just as Mr. Real Estate follows Tampa. I just don't see the bubble behavior in our real estate market that is widely reports on a national level.