This is a good article, from the

Washington Post.  It’s about real estate in the Washington DC area, but the points it makes

are relevant to us here, in Boston, as well.  It pretty much says what everyone else is saying

(parts of which I don’t agree with, by the way) - that the real estate market seems to be

over-heated in certain areas (West and East coasts), that rising interest rates will mean a cooler

real estate market, but also that changing demographics and a limited number of properties

available for sale may lead to a slower market, but no outright crash.

In

Real Estate Fever, More Signs of Sickness

Some Economists Warn of Housing

Bubble

By Daniela Deane

cite="http://www.washingtonpost.com/wp-dyn/articles/A59515-2005Apr16.html">

Although there are no

official government tallies yet on how much real estate prices have gone up in the Washington area

this spring, local real estate agents and builders estimate that prices may have risen about 15

percent just since the beginning of this year. And that’s on top of the 21 percent they rose last

year, according to the Office of Federal Housing Enterprise Oversight, a federal agency that tracks

sale prices. Over five years, according to the agency, prices here have risen 89

percent.

For homeowners, those increases have meant a rapid rise in wealth,

at least on paper, and higher property tax bills. But would-be buyers such as Marshman have found

that they have to stretch their budgets more than they ever imagined. Homeowners who believed that

by now they would be able to trade up to bigger, better houses find themselves stuck in what were

supposed to be starter homes. That means they don’t sell, further tightening the supply of houses

available.

There are signs that things could be getting out of whack,

prompting some economists to warn that the real estate market in at least some parts of the country

is in a condition much like the stock market bubble of the late 1990s.

Other

economists, however, say rising house values in many metropolitan areas, including Washington, are

supported by changing demographics, job creation and still-attractive mortgage rates. Federal

Reserve Chairman Alan Greenspan has said the central bank does not think there’s a national

problem.

Among the symptoms that some say point to a bubble: a widening gap

between rental and ownership costs, a spike in the number of investors rather than occupants

buying, and a ever-tighter affordability squeeze. Much of the boom in recent years has been

sustained by low interest rates, which kept monthly payments down even as purchase prices rose. But

the consensus among economists is that interest rates will rise at least a little this

year.

Link: In

Real Estate Fever, More Signs of Sickness (washingtonpost.com)