Radio broadcast on current strong RE market and the road ahead

[Wayne Igo]

I came across a recorded radio broadcast from two experts on the current strong market and how this may come to an end starting 2015.  The link is below and find the audio track with the title "Is Houston in a Real Estate Bubbly?".  Comments please.

http://www.houstonmatters.org/segments/segment-a/2...

[Jerry Ta]

From reading the comment that a person posted below that article, something just dawned on me.  People always ask me how much a house is worth, my response normally is that it's worth however much someone is willing to pay for it.  Historical sales comparables gives us an indication of what we believe someone may pay for a specific home.  

When someone says that a home was at one point overvalued, that means that the market or really buyers in the market, are unwilling or unable to pay for the same price they paid for it at a minimum.  

When I think of bubble markets, I want to believe that is usually due to speculators with available cash absorbing inventory with no intention other than to sell later at a profit.  From what I saw over the past year, unless someone can show me otherwise, is that properties are being sold to owner occupants and not speculators.  

In Houston, which has a growing population, I don't believe you can ever find balance, usually the pendulum will swing way, then the other way.  For example, once the apartment occupancy rates hit approximately 90%, then new apartments are built.  Once all the apartments are done being built, we will have an over supply of available apartments.  

So to answer the question if the Houston's real estate market is about to burst, it will be more a function of Houston's local economy than something real estate specific, such as speculators in the market. If there is continued uncertainty in Houston's economy, then people will be less likely to buy homes and the remaining unsold inventory prices will have to be reduced in order to be sold, so the homes that were sold prior to these may be considered overvalued at one point.