Monday, July 18, 2005

Flipping Houses in a Bubble

With much talk today about the pending real estate bubble, some of my students have expressed fears about buying houses in California.

Rising prices may have slowed down before summer hit, but our low-end houses have all but disappeared on the MLS. You can still buy a 500 square foot one bedroom home, a condo, or manufactured home for about $250k. But a nice three bedroom will cost you more than $300k. It seems to me that the prices have risen about $10k per month since May. We have been watching the local market closely because we're getting a fixer ready to sell.

So, what about the bubble? If the economy changes and people start losing their jobs, they may be forced to sell. Other homeowners will just hold onto their homes and wait to sell. Prices may dip on more expensive homes where there isn't a strong market. Because people always need housing, the lower-priced homes will always be in demand.

Think about this: when a home owner sells a $500k house because of financial difficulties, where will he go? To a less expensive home. If you're flipping houses and are concerned about the possible real estate bubble bursting, stick to modest houses so you won't pop.

Copyright (C) 2005 Jeanette J. Fisher
Doghouse to Dollhouse for Dollars

0 Comments:

Post a Comment

<< Home