Bubble trouble?
The red-hot housing market reminds some of the latter days of the 1990s stock market. How will it end?
David Shulman wouldn't just downsize. "If it was only an economic decision, I'd sell and rent for a while," says Shulman, who oversees real-estate equity research for Lehman Brothers in New York. The only thing stopping him: "my wife. She'd divorce me if I sold our place."
To be sure, a house is as much an emotional investment as it is a financial one. And even Shulman and Goodkin say those who buy and hold for the long term aren't likely to lose their shirts. That said, "anyone who can wait should," says Shulman. And those who can't "absolutely should lock in a fixed-rate loan," Goodkin says of 30-year mortgages that are still below 6 percent. "It's wonderful insurance that can protect you over the long run."
It's advice even gamblers like Wu have taken to heart. Although he purchased his San Diego home with an adjustable-rate loan, he recently refinanced at a fixed rate. "My parents think I'm going to go broke," he says of his real-estate investments. "But I ran the numbers, and I feel like even if the worst-case scenario happens, I'd only be losing maybe $500 a month, which is the equivalent of buying a new Bimmer [BMW]. And at least my real estate will appreciate."
Or so he hopes.
UP, UP, AND AWAY
Most of the country is seeing a housing boom, but some places have seen a small decline.
Top number: Percentage change in median house prices in the third quarter of 2004 vs. the third quarter in 2003.
Bottom number: Median house price in 2003, in thousands.
San Diego, Calif.
32.5 pct.
$424.9
Las Vegas, Nev.
53.7 pct.
$179.2
Honolulu, Hawaii
19.5 pct.
$380.0
Tacoma, Wash.
12.1 pct.
$178.1
Boise City, Idaho
3.3 pct.
$130.6
Albuquerque, N.M.
1.6 pct.
$138.4
Fargo, N.D.
8.5 pct.
$115.1
Oklahoma City, Okla.
17.5 pct.
$103.0
Dallas, Texas
-1.6 pct.
$138.4
Madison, Wis.
10.2 pct.
$188.7
Des Moines, Iowa
4.3 pct.
$133.9
Champaign, Ill.
8.6 pct.
$118.3
Shreveport, La.
8.5 pct.
$100.7
Toledo, Ohio
-3.0 pct.
$111.1
Providence, R.I.
17.6 pct.
$223.4
Monmouth, N.Y.-Ocean, N.J.
14.7 pct.
$288.3
Washington, D.C.
22.3 pct.
$286.2
Bradenton, Fla.
40.7 pct.
$172.7
Source: National Association of Realtors
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