No Slack in Housing Demand
Despite some talk from economists about a housing bubble - not unlike the dot-com bubble - getting ready to burst, private homebuyers aren't listening and perhaps don't need to.
According to commercial real estate research firm ResearchWorldwide.com, homebuyers, on average, are ignoring warnings of bursting bubbles and are continuing to demand residential property to buy worldwide.
On average, house prices recorded an 8.7% price increase in 23 countries in late 2004/early 2005. The United States ranked No. 8 in the list of countries from ResearchWorldwide.com, showing a 10.2% increase in February 2005 from the same period a year ago.
The average homebuyer is still seeing "bricks and mortar" as more attractive than securities and bonds, according to ResearchWorldwide.com.
"Economists from all over the country have been beating each other up about this so-called real estate bubble," said Andy Pollock, CEO of First Franklin Financial.
"I don't believe [a bubble] exists," added Mr. Pollock.
Instead of a bubble, Mr. Pollock said that he believes that, rather than a national or regional bubble, there is the development of "bubblettes" within MSAs.
ResearchWorldwide.com said that it believes that excellent investment opportunities in publicly quoted securities remain elusive, while yields on bonds remain unattractive.
"Ten years ago, no one wanted to lend in Texas. Now it's a booming market," said Mr. Pollock. "Many real estate industry watchers are worried about lending in Las Vegas, but are the casinos and other tourist-related industries that drive the local economy going to leave the area? Probably not."
Prices have gone up due to increased housing demand and diminished housing supply.
"The only bubbles that lenders need to fear are those that already exist within their own quality-control process," said Mr. Pollock.
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