Mr. Moderate

Wikipedia has an excellent article on the housing bubble in the United States. I can’t recommend it highly enough. (At least, as the article stood as of the date of this post; it could be changed tomorrow for all I know.) As it sits, it aligns perfectly with my own thinking on this subject. If you want more on my own take on the housing bubble, please read my page on Greater Wealth & Fools.

The bottom line here is this: don’t buy a house anytime soon unless you are in a low-inflation market or can’t afford to wait (if, for instance, you’ve sold your old home and have to “roll over” the gain within a fixed amount of time). Plan on the possibility that housing prices may go lower for the next 5 to 10 years. If you can’t withstand that kind of a housing market, with low inflation leading to low wage increases for those who still have jobs, then rent and do not buy. Sub-prime borrowers should avoid buying altogether, as the sharks have circled for a final feast, and you had better believe that they know their bubble is bursting!