Reply #70: Sorry, but it's a bubble.and I'm not into REITs [View All]

[JDPriestly]

There is no relationship between the rise in home prices in the Southland and any rise in wages. The rise in housing prices is a bubble. Katrina may prevent it from bursting, however, because Katrina is likely to prevent Greenspan from raising the interest rates.

In addition, although the lost housing stock is in the Gulf area, there will be a slightly greater demand for housing everywhere due to the numbers of displaced people. That will hold housing prices up here also.

Then there is also the belief that has taken hold since the stock market crash in 2000-2001 that real estate is a better investment

But it is speculation for the most part that is driving the prices up in So. Cal. In my neighborhood, an architect bought a tiny very old uninteresting house, completely redid the interior and, small as it is, it looks fabulous. Now she is placing it on the market for some incredibly high price. She will probably get her price too because she did such a fabulous job on the redesign. Still, she is basically a speculator like several others who have bought properties and fixed the up in order to resell at a profit. They owe their continuing prosperity to Katrina I believe.