Monday, July 25, 2005

Will the bubble finally burst?

There has been a lot of discussion in the Washington DC area as to whether there is a bubble in the housing market. Prices on homes have been increasing rapidly since 2000, houses last only a week on the market, bidding wars and home values increase faster than salaries. A family of three making up to $90,000 a year qualifies for homebuying assistance from the City of Alexandria for the purchase of a home priced up to $399,500. Which leads to the question, who can afford to buy a house in the current housing market?
Now according to The Washington Post, the housing market may finally be stabilizing. So now houses are selling in two weeks instead of one. Three weeks for a fixer-upper. I don't think this means the bottom is falling out of the market.
On a personal level, I would love to see housing prices fall. I can actually afford to buy a house close to work and school. A condo or townhouse is all I'm asking for.
On the other hand, a bubble bursting would mean a sharp decline in property tax revenue as tax rates are reassessed. Which would hurt schools, roads, park maintenance and other things that improve quality of life.

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