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January 05, 2006
Maine bubble leaking...
While most real estate watchers are keeping their eyes peeled on the big metro areas like Boston, Washington, D.C. and Los Angeles, folks would be wise to pay attention to second and third tier property markets as well. After all, only 24 million residents, just 10% of the U.S. population, live in the most-populated 10 cities in the country.
One such market is Portland, Me. This article in the Portland Press Herald (free access, but registration is required) features a couple who got caught owning two homes, not because they wanted to, but because they couldn?? sell one due to the slowing real estate market. While the stats of sellers dropping their prices aren?? as dramatic as those in Boston, they??e telling nonetheless.
Perhaps even more interesting is the mini-blog thread that follows the story. I suspect the bursting of the real estate bubble is going to be more like a slow, gradual leak than an actual pop like we saw in the dot com crash of March 2000. What do you think?
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"I suspect the bursting of the real estate bubble is going to be more like a slow, gradual leak than an actual pop like we saw in the dot com crash of March 2000. What do you think?"
I think you're right. We will have a number of months (18?) where the numbers show close to 0% appreciation, before finally going truly negative and doing the needed correction before returning to positive levels (2009-2010?).
There will probably also be a dead-cat bounce involved where we have 3-5% appreciation for one or two months and all the pundits will be saying "housing is back" and breathe a sign of relief, before going negative again.
Regardless - I expect a full generation of investors will be scarred from the aftermath of this bubble.
Posted by: Wes at January 6, 2006 11:34 AM
Good answer! Let me add a few thoughts.
The Dead Cat Bounce will be the second round of "dumb money", that thinks the market is just taking a breather and will take off again.
Real Estate devaluation historically last 3 to 5 years, so I think you are correct there also.
This is my 4th bubble. (I'm 54) I have made money in every "down" market since I was 19.
The trick is "don't buy too soon!!" Discipline!!
Buy when everyone is becomes convinced that real estate is about as marketable as the aids virus.
Be a proactive contrarian!!
Posted by: Mike at January 13, 2006 02:40 PM
Maine can be a very scary place to do a real estate transaction!
Posted by: Maine Outsider at July 6, 2006 07:47 PM
What's going on in the Maine summer home business?
Posted by: Bob Kittredge at December 28, 2006 06:58 PM
Northern Maine's values do not spike up and down. Instead of peaks and valleys...we are in our own little world up here in the left hand corner of the world. Friendly folks and only 11 of them per square mile in Aroostook County! Aroostook County is the size of CT and RI combined! It borders Canada and is the start of I-95 system that connects to the trans canada highway!
Posted by: Andy mooers at February 25, 2007 12:13 PM