Catchy headline! Caught your attention didn't it? Don't panic. At least not before you read the rest of the post.
"Housing bubble" has been one of the buzz words in residential real estate for the past few years. Maybe the popularity of the phrase has to do with what a great image it creates. It would be hard to find an economist, a news reporter, a home buyer or seller that would say they haven't heard of the US Housing Bubble.
Even Dr. Gaines, from The Real Estate Center at Texas A&M has a whole slide in his power point presentation about the 2010 Outlook for Residential Real Estate. Here's a copy of that slide.
Home prices escalated way beyond the historical norm beginning back in 2002. The escalation had reached a peak in 2006. Interesting to see that in Jan. 2010 the US Median Home Price is actually lower than where it would be if home prices had stayed on the typical 3-5% a year increase. Look at that again. Homes prices are lower today than where they would be if there had never been a bubble.
Now look at Beaumont Home Prices:
Notice anything different between the two graphs? First, Beaumont home prices are above the historical trend line. Not by much, but none-the-less above. National home prices are below the historical trend line. Second, our average rate of increase is 4.6%. The past two years have seen return rates closer to 9%. Compare that to a decrease in national home prices for the past several years. Third, this is worth mentioning. Our median home price in Southeast Texas is approximately $132,000. The US national median home price is closer to $170,000.
Its hard to see a bubble when you look at the historical trend line for the Southeast Texas residential housing market. So, don't panic. It was just catchy headline after all.
*Credit for the graphs goes to Dr. Gaines and the Real Estate Center at Texas A&M. **Credit for the photo of the bubble goes to Cinnamin. You can find more of her photography on Flickr.com
Comments