Re: real estate predictions
We have friends in DC area. Back in 2003 they put an offer on a mid $500k house, but the winning offfer came in at $50k over asking. Less than a year later they found another house they liked in the mid $600k, so they overbid by 50k. This time the winning bidder came in $250k over asking. My brother in law moved there late last year. They're renting as the madness has yet to abate.
Bubble behavior? You bet, but I think this bubble is more isolated, so as long as there aren't major changes in economic activity in a given area (e.g. Tech bubble in CA) you won't see a sudden collapse - more like "death by a thousand cuts"
Meanwhile, here in SE MI, the market has been soft for the past 18 months or so. On average, houses take 9 months to sell. In 90% of the communities, prices are flat or falling. Note: Michigan has the first or second highest unemployment right now.
I'll go out on a limb and make some predictions for the next 12 months....it's basically taking what I see in Michigan and expanding it to the rest of the US.
1) Oil prices continue to climb, staying between $50 and $65 a barrel.
2) No significant improvement in budget or trade deficits.
3) Dollar does not weaken due to political pressures from Asia and Europe.
4) Dual deficits force the Fed to continue creeping up interest rates.
5) Higher commodity prices, stable to stronger dollar and rising interest rates mean the US economy will continue to straight line or even weaken. Right now there is minimal ro moderate economic growth but it is not broad-based.
6) Localized pockets of prosperity continuing to drive higher RE prices in very isolated areas.
7) General stagnation or decrease in residential RE prices in most metro areas.