Is It or Isn't It?
Do I think the residential market is overvalued and all homeowners will lose their shirts soon if not sooner? No. Fear and panic are almost never are the best responses to an uncertain situation. But let's face it, the market must cool. Prices have come too far, too fast not to.
Even if you are now buying at the peak (and no one knows whether you are or not until after the fact), no matter what you will be richer in ten years, if:
- your property is in a gentrifying neighborhood (i.e. U Street),
- you did not wait too long to get into the game and/or
- you did not engage in the equivalent of a nuclear bidding war when you originally bought the place.
Needless to say, the days of buying a property, flipping it after holding for 6 months and then enjoying a 20% jump are over. But that does not mean when prices come down they will drop, say, as fast as when they went up.
We are talking real estate here, not equities. Unlike stocks, which can be dumped in an instant, real property takes longer to sell because of the legalities and because it usually is occupied, possibly by you. In other words, the housing market is less volitile than more liquid market, like high-tech stocks or Dutch tulips. Bottom line, the market soon will fall slowly.
Then again I have been wrong before about the direction of d.c. housing prices. Years ago even before guru Alan Greenspan warned of an over-ripe market, I was saying prices could not go higher. Well I sure was wrong then and could be wrong now.
Any wanna buy a seven-figure one bedroom in Dupont Circle?