Housing Bubble?

The 2004 housing analysis is out and it shows that home prices rose across most markets. This is not surprising to most of us. However, there were pockets where home prices fell. Home prices rose fastest in the West and Northeast, whereas the Midwest and the South saw small increases.

Housing and real estate, like politics, are local matters, I don’t really take too much stock on the national trend. I mean if you’re in one of the small towns of Indiana where home values fell you have no reason to feel good that home prices in Arizona jumped 15%. It is for this reason that I don’t believe there is an across the board housing bubble. Using the same line of thought I don’t think there is going to be an across the board housing bubble burst.

There are pockets of danger – like Southern California or areas of Arizona – but incomes in those regions are rising as well. Portland, Oregon has some issues, since income is not rising anywhere close to the rise in home prices. I know people making good money who are priced out of a decent home right now. There is a likely hood of a bubble burst in these areas.

However, unless you live in one of those Sourthern or Midwestern states – you’re most likely going to see anywhere from 3-10% increase in the value of your home over the next few years. So, rest assured, in fact with the stock market the way it is, real estate is fast becoming the most reliable investment.

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