Word: booming
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...house has always reflected its occupants' place in society. But now it also determines their place in society. The boom has divided haves from have-nots-- owners from renters, hot markets from cold. The median U.S. home price jumped in April to $206,000, up a stunning 15% over the past year and 55% over the past five years, according to the National Association of Realtors. The fact that houses are bought for pennies on the dollar magnifies the windfall. Say you put down 20% on a $150,000 house five years ago. At the average gain of 55%, that...
This is the $64 billion question of the 21st century's first boom: Are today's real estate revelers partying like it's 1999--just before the stock-market bubble burst? To Edward Leamer, economist and director of the UCLA Anderson Forecast, the housing market, especially in hot coastal areas, is a bubble just as ripe for popping. "We've had a more than doubling of housing prices in the past three years here in Southern California, for instance, and there's no fundamental driving it," he says. "There isn't some big crush of people coming to California. That...
...there are troubling aspects to the real estate boom. At the stock market's peak, 1% of investors controlled about 33.5% of stock wealth; the top 1% of home-equity holders have only 13% of housing wealth. In other words, a broad drop in home values, should it happen, would affect a far larger cross section of Americans than did the NASDAQ bust...
Whether the market rises, plummets or flattens, whether it happens over one year or five, it will not undo changes that the boom has wrought in the relationship between homeowner and home. The tech crash and the market slump didn't erase the culture of stocks. Even after day-trading mania disappeared, there remained a broad class of people buying stocks and mutual funds who were more knowledgeable than they used to be about the market and more closely attuned to business news...
Likewise, the deeper changes of the real estate boom are likely to stick, particularly the notion that the house is no longer just a home. By tapping their built-up home profits through refinancings and home-equity loans, owners have ensured that the home-as-piggy-bank will be with us for some time, and that may have wide implications for tomorrow's economy...