Welcome!

Welcome to Ready to Burst, a site I created to chronicle the housing bubble and its inevitable burst. Over the past several years we have seen a dramatic increase in home prices around the country, more focused in certain areas. I live in one of those such areas - San Diego, California. According to the San Diego Housing Commission, as of March 2005 the average new, detached home in selling for $781,000. The median single family home clocks in at $530,000, a home price that less than 11% of San Diegans can afford. Despite seeing a doubling in the average home price between 2000 and 2004, the median household income increased only 10.4% (source).

I am not an economist; my experience in the real estate market is limited to the only home I've ever purchased, a condo I bought back in 2001. I don't claim to be an expert, but I do know the basics of economics and supply & demand. I know that when the price of a good or service becomes radically out of line with the wages of the consumers something has got to change. I think we are nearing the end of this explosion in home prices.

If your average home owner had fiscal responsibility in the front of their minds instead of house fever, I don't think we'd be in a housing bubble. Sure, we still might have seen quite a rise in home prices, but when this had run its course we would see a plateauing of prices. With the bubble we're in now, chalk full of home owners who have adjustable rate mortgages and interest-only loans and are barely making ends meet as it is, we're going to see the bubble burst.

With this site I intend to publish various articles that I find of interest and add my commentary. I invite you to add your own commentary as well, by adding your comments to my posts. Do you think that we're in a housing bubble or will prices continue to soar unabated? When prices do stop will we see a plateau in home costs or a downward spiral?

The next few years will be interesting ones for the real estate market. We had one hell of a run up and it's going to be one hell of a ride back down. What does this mean for the average Joe? Well, if you were smart and bought a home you could afford with a fixed interest rate, you'll be OK. While the slide down may be a bit alarming, you won't lose your home, although you may see friends and family who aren't so lucky. If you bought a home recently and stretched to do so, choosing an adjustable rate or interest-only mortgage, I fear things will be dire for you. And if you've yet to enter the real estate market, have patience! Home values are at insustainable highs right now, and are bound to come crashing down. Patience is a virtue, doubly so in the realm of finances. Prices will come down so wait until that happens and look for motivated sellers and you should get one heck of a deal compared to today's outrageous prices.