Real Estate Bubble

March 26, 2005

I am hearing different economic forecasts on the current state of the real estate industry. In some parts of the country real estate prices are rising astronomically! In the Washington DC Metro area we experienced 20-25% growth per year for the last few years (I can see it in my assessments). Some say we are in the same kind of bubble that took place with the dot coms. Others (primarily real estate pundits) say no; the growth rate will just cool off to single digit rates. It would seem to me that as long as the feds are raising interest rates, the real estate market has to start cooling. I also read that the DC metro area will create 1.6 million new jobs over the next 5 years. People filling those jobs will have to live somewhere. Hence, a prolonged housing shortage. What's your thinking?

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