Redneck's Wife
Wednesday, June 01, 2005
  Housing prices
A few of us at work have been having a debate about housing prices. Are they going to keep going up? Is it a bubble that's going to disastrously pop?
No question, prices in California are crazy. And more and more people are getting interest-only loans and HELOCs(Home Equity Line of Credit) so that they owe more on their house than what it's worth.
But I can't discount the fact that our house, purchased 2 years ago (and yes, with an interest-only loan) for around 370K is now appraised at $550K. This is for an 800 square foot house, mind you. So I can't really feel that we made a mistake. Plus, we like living there.
Anyway, the debate at work has been between three of us. The deal is, we check the trajectory of housing prices once a quarter or so. Whoever is wrong has to buy everyone else lunch. One guy, Gerry, is currently renting, and has been saying for at least 2 years that the housing market is going to crash (the same two years in which our house appreciated 180K). He has some good points, and I have to admit, he makes me worry a little. But, he bought lunch this time.
The other guy, Adam, owns a house and a condo which he rents out, and he is convinced the market will keep going up. I'm kind of in the middle. I can see the warning signs: rising interest rates, rising debt, riskier loans. But then I think:

So we'll see who's right in the long run. Meanwhile, I'll be enjoying my equity. And my free lunches.
 
Comments:
Yeah, I dunno - I was one of those who thought the prices would tumble at some point, but they keep going up, up and up here in Massachusetts too. I just figure what goes up must come down, eventually...
 
Lori,

Yeah, it's pretty nuts out here. As far as the ocean goes, falling off hills has been more of a problem lately, but that's in Southern Cal. One thing at a time, I guess.
 
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