Well, we’re not the only place with an apparent housing bubble, er, bull market.
In contrast, America’s housing bubble continues to inflate. Although the rate of increase slowed in the fourth quarter, prices were still up by 11.2% over the year. In California and Washington, DC, housing prices rose by more than 20%. Alan Greenspan, the Fed’s chairman, recently admitted in congressional testimony that there may be property bubbles in ?certain areas? and a risk that prices could decline. There is certainly evidence that prices are being driven by speculative demand: a new study by the National Association of Realtors shows than one-quarter of all houses bought in 2004 were for investment, not owner-occupation.
No specific mention of the Boston area here, but this is obviously about us, too. We seem to have a genuine housing shortage in this area, although MA is losing population. But it’s been said that one of the signatures of a housing bubble is a divergence of the cost of renting and buying… and anyone who’s been in the market lately knows what $300,000 *won’t* get you in this area.
It seems to be possible to have a shortage and a bubble at the same time.
