Is This a Real Estate Bubble?

I was running an open house recently and was asked, "Do you think this is a new real estate bubble?"

It wasn't the first time I had considered the question. It's a live topic with this year's rapid price increases, bidding wars, and such in Manhattan Beach.

Many real estate agents will dodge this question. But I feel an obligation to try to answer it carefully. After all, I have clients on both sides in this market. And I'm known somewhat for having publicly "called" the popping of the last bubble in 2007, right as the market got wobbly and then declined.

My short answer now is this: The experts can't call it a bubble yet, so I won't. But yes, it seems that price increases like we've seen this year are not sustainable.

I can imagine any of several factors that might slow or halt the rate of increase. I just don't know if any of those factors will come along within the next two years or so.

If no one taps on the brakes, I can only reasonably predict a continued uptick, even if that makes high prices look crazier next year or the year after. I do predict that the talk of a "bubble" will increase with prices and, frankly, even that chatter could start to change the market psychology.

We're not there yet, though. There could be more madness ahead.

If you'd like to hear more of what the experts are saying on this topic, I summarized several opinions in this recent post on Manhattan Beach Confidential.