There have been articles in several places recently, such as this one at the Volokh
Conspiracy that would seem to indicate that housing prices are starting
to soften in several formerly hot markets.
This is not entirely unexpected, given what’s been happening with interest
rates over the past year and change. If anything, it’s been amazing…and
somewhat irrational…that the housing boom has continued as long as it has.
The economic impact of the deflation of the bubble should be interesting.
I’ve read that strong consumer spending — particularly spending related to
home-buying and ancillary purchases — is what has kept the American economy
going through what has been a generally sluggish environment around the
globe (albeit with some regional exceptions, such as China).
In my corner of the world, one of the drivers of the housing bubble has not
only been the relationship of cheap credit and low returns on other
investments, but also a lack of supply. Until recently, there wasn’t all
that much home-building taking place in/around Hartford.
That’s changed over the past couple of years, with hundreds of new homes
being built around the area, hundreds more new luxury apartment and condo
units going in downtown Hartford, and the explosion of “Active Adult”
communities around the area (including the 55 unit monstrosity going up
literally in my back yard).
Throw in some layoffs at key companies in/around Hartford…this could be a
very “interesting” situation arising locally.
