Anyone Worried About Today's High Housing Prices?

[Jason Merchey]

Meaning, in my city, prices have moved forward so aggressively that they have made up for all of the 2008-2010 losses, and there is still somewhat low inventory. Two things kind of concern me - one, the way construction is happening - is that going to lead to overbuilding and sinking rents? Second, as you know, one should "buy low and sell high." So even though mortgage rates are currently low, is it a concern to buy now due to housing prices being relatively high? To clarify, I am planning on buying two or three SFDs as rentals to hold for the very long term. However, I'd kind of hate to see a dip in prices in 2014 or 2015. I suppose if it's cyclical, and the worst doesn't come to pass with the stock market or the jobs/wage situation or government debt causing a meltdown, then I can just weather the storm of a 3-4 year price drop because I would still be paying down debt on an annual basis (and inflation would be helping me).

Thoughts on this? Would you buy now if you were willing to be a landlord for 20 years, or wait until prices fall for whatever reason? I would also worry that if x or y happens causing the housing market to fall, that banks might tighten lending criteria as well, putting a mortgage out of reach for a self-employed person such as myself.