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Is the Real Estate Market Cruising for a Bruising?

Posted by: Peter Coy on March 30, 2006

Your votes, please.

First, read the cover story in BusinessWeek, put together by your Hot Property blogging team, and then weigh in with your thoughts by clicking on the Comment button at the bottom of this item.

Do you think there is a national housing bubble? Or a few scattered local bubbles? Or no bubbles at all?

Do you think people tend to make some characteristic mental errors when it comes to housing, such as loss aversion, the tangibility fallacy, etc., which were mentioned in the article?

Bottom line: Is a house a good investment these days?

Vote early; vote often.

Reader Comments


April 1, 2006 9:13 AM

People buy for a number of reasons:
Gut need to own a home.
Keep up with the Jones's.
Fear of being left behind/ being different.
Herd mentality is definitely a big reason people have been rushing to buy properties that in many cases they can't afford. While there are some areas where there is no bubble, the areas where there is - the coasts primarily - have the most houses and the ones that cost the most so the effects of a downturn will be enormous.


April 1, 2006 5:39 PM

Good for developers/investors? No. Good for regular people who want to buy a house to live in for the long haul? Yes. That is yes, if you can afford to buy one in the first place (my husband and I just moved to DC and make a good living - 6 figures plus - but can't afford a single family home with more than 2 bedrooms close enough to the District where he commutes each day).

I still think a home is a good investment if you are in it for a while, even if the market does cool. As was pointed out in the BW package, the "righting" of the market will still mean gains (usually) over time as with the tech bubble of the 90s has shown.

But if you are looking to buy, flip and sell for a property, you are SOL for now.


April 4, 2006 2:42 AM

As was said in the above comments long term hold= you should be ok if you don't have an adjustable that will wipe you out if it ticks up a couple points in the future assuming rates get up past 9% could be trouble with economies where incomes dont rise fast........ Coastal areas definiley I think will be coming down, but the real issue i think is the wave of foreclosures there will be in the next 5 years..... these ARM's will throw people in to delinquent territory, and the one's with better vision on the sidelines will come in and benefit from the insight, and at the same time help the sellers walk out of it okay hopefully.... same as all the cycles... one long term aspect most people don't pay attention to is replacement costs.. this is good for prices in the long term since materials and construction costs are rising year after year

Peter Rizzo

April 4, 2006 1:04 PM

In 2003 my wife and I bought a brand new 1200 square foot manufactured home ( commonly called a "doublewide" )for 40,000 dollars, had it installed on a half acre of land that we already owned and paid off the lender in less than a year. Were debt free again and wonder why the rest of you buy expensive housing when there are cheaper alternatives out there. For me it's all about finicial freedom.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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