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Why the Housing Bubble Hasn't Burst
| | Wednesday, January 19, 2005 @ 11:00 PM EST
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Contributed by: Ken Lyons
Ken Lyons Properties
Read more archived articles about Economy - Good
Factors that have kept housing prices rising are worth watching for signs of weakening.
NEW YORK (CNN/Money) - No one's really sure if the nation's housing market is a bubble at risk of bursting, or fairly priced with more upside ahead.
But analysts generally agree that low mortgage rates and other factors have boosted the market over the last five years, through a recession, job losses and the Sept. 11 attacks.
Still, some cracks are starting to show.
Reports on housing starts and new home sales, both considered leading indicators of the housing market, posted much sharper-than-expected declines in November, although December starts rebounded smartly. And the November report, the most recent available, showed median new home prices showing a slim but rare year-over-year decline.
So are home prices set for a tumble? Here are three major areas to watch for warning signs of trouble ahead.
Low Mortgage Rates
A key factor supporting the real estate prices are continued low mortgage rates. Even economists who have warned of a housing bubble for several years say low interest rates have helped the housing market stave off problems.
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