July 20, 2006

Why Our Housing Prices Are Out of Control

Steve Crossland of Keller Williams Realty here in Austin posts about the housing bubble today, citing this interview with Mark Dotzour, an economist with the Texas A&M Real Estate Center. With a 12 1/2 percent appreciation rate, Dotzour notes that the U.S. housing market has been driven by "intense demand in the United States to buy a home, in part driven by the basic need for shelter, but also by investors' lack of trust in Wall Street." As his post notes, people are wary of putting their money into foreign markets like India.

Here in Austin, aka "Flip Central", we've really been feeling the heat for the last two years, with Californians and other investors licking their chops. I was talking to my friend who's looking to buy a house, and she said the city should pass a law requiring prospective home buyers to reside in a house for at least a year before moving on. Is this naive? Anti-capitalist? Have a snowball's chance of Hell of becoming a law? Kill the economy? Deplete the city and county's tax base? I know, I know... But is there anything we could do to make it a fairer market and disincentivize the flippers and out-of-state investors? Pie in the sky or not, it would be nice to be able to afford a house without moving to Kyle or Buda and eating ramen noodles. I suppose it's the price to be paid for living in a popular place.

Posted by timothompson at 02:10 PM