How many of my intrepid readers have been on the receiving end of such exclamations from realtors in DC? "There's no other real estate market like it in the world!" And so I was assured of real estate investing success, right?
However, there are places similar to DC's real estate market. Places like London, Rome, Dublin, Cape Town are all international hubs. I pointed this fact out to the otherwise enthused realtor. His eyes grew blank and he just repeated himself. I guess that works in picking up girls at the 9:30 Club, but it is not enough to get me to part with money.
We are headed for a 'correction' in the DC real estate market. OK, I lie. We are already IN a correction in the DC real estate market. I can see it about the edges. In Columbia Heights, my stomping grounds, houses have been 'just reduced' for about six months now. The transitional neighborhoods like mine are the first places where a housing slowdown will be seen. And I have been seeing it.
Looking as I have been to the London market in property, I echo what the linked article says: higher interest rates affect housing demand. Unlike the UK, our Fed is less concerned with supporting a housing bubble. When property prices became too speculative, the Exchequer raised UK interest rates out of concern. That move had the desired cooling effect on the housing market in the UK.
Now people in the US are saying that rising interest rates will not have a negative effect on US housing prices. WRONG! It will, and to the extent that bozos across America are paying interest-only mortagages, or mortgages whose rates fluctuate, people will be less able to pay their mortgages.
Personally, I am waiting for the KERPLUNK of everyone realizing that their little investment rental property will not pay for itself with rental money. They will hold on for a while, just as they did in London, according to the article linked above, but soon it will be too much. That is when I will swoop in like a vulture and giggle as I dance below their asking price.
Is that too much to ask for?