The long search for a new home is officially over. After casually looking for the past two years and looking in earnest for the past six months, Hannah and I found a house earlier this month. After some negotiation, we reached an agreement with the seller yesterday. We are going to be moving soon!
Now I just hope we didn't buy at the top of the market.
The topic of a "housing bubble" (or "a lot of local bubbles" as Federal Reserve Chairman Alan Greenspan said last week) has been on my mind for a while now. I wrote about it again just last month. Housing appreciation has far outstripped wage growth and overall inflation.
The Wall Street Journal has had a front page article nearly every day for the past several days related to the housing market.
Yesterday, Bloomberg reported that:
The median price of a previously owned U.S. home topped $200,000 for the first time in April, capping the biggest increase in a quarter century, as Americans bought housing at a record pace....The price for all housing types rose 15 percent from April 2004 to a record $206,000....The 15 percent annual increase in the median price was the biggest since November 1980.
This is being fueled by a lot of factors, including low interest rates and increasing numbers of investors and speculators in the market. It is this last factor that is so concerning. When the music stops (and it most likely will at some point), demand will contract and some people are going to be in for a rude wakeup call.
This morning's Oregonian notes that:
Housing prices continued to rise as buyers snapped up existing homes and condominiums at the fastest pace in history last month....concerns that the housing industry could be experiencing a speculative bubble similar to the stock market bubble that popped in the spring of 2000.
Portland-area home sales have reached appreciation levels not seen in more than a decade. The region ranks in the top third nationally for appreciation in existing home prices, according to first-quarter figures....The median sales price of existing homes in the Portland metro area rose 14.7 percent -- to $233,700 -- in the first three months of 2005, compared with the same period in 2004.
I can't help but feel a little like someone who buys a stock after it has already doubled in value. At least we're buying this house with the primary of objective of calling it home and not with rose-colored expectations of making millions.
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