- The Washington Times - Wednesday, November 23, 2005

My ears hurt from all the squealing I hear about the impending bursting of the “real estate bubble.” Sometimes I feel like the lone voice of reason crying out in the wilderness.

The real estate bubble naysayers whine about the “bubble” as if the whole national real estate market were nothing more than another overinflated stock exchange.

Folks, it is not. Like politics, real estate is local, and I wish those journalists scaring buyers with quotes from their stock market experts would just stop and consider some real facts.

• The top hot U.S. real estate markets are also the top hot job markets.

• Houses are where the jobs go at night.



• Although there are pockets of overinflated real estate, without enough houses in a hot job market, your housing inventory will escalate in price.

• You have to live somewhere, and it’s never in a stock portfolio.

Whether renting or buying, there is an automatic necessity for the ownership of real estate, either by a homeowner or an investor. There is no built-in necessity for owning stocks, so there is no real comparison between the two.

In the hot markets across the country — where the squeals are loudest — investors must look to the local economy to determine their risks.

In the Washington area, the Northern Virginia Association of Realtors (www.nvar.com) looks at those numbers every year at its annual economic summit held at George Mason University.

Unfortunately, most of the press gives it cursory coverage. I think it was especially so this year, because the economists did not dance to the sky-is-falling mantra of bubble theorists.

In the interest of full disclosure, I once worked as NVAR’s director of communications.

The NVAR’s latest monthly Update reported on the summit.

“In a nutshell, you couldn’t be in a better market,” says Dr. Stephen Fuller, director for the Center for Regional Analysis and School of Public Policy at George Mason University (www.cra-gmu.org). “If you’re worried about some bubble, or slowdown, or something that’s evil, just put yourself in any other market. They envy us.”

To put it bluntly, we’re going to have a housing problem in the future, but it’s not the bursting kind. Rather, it is the “how-can-I-make-$60,000-a-year-and-not-have-to-live-out-of-my-car” kind. In the Washington area and other hot job market areas, housing is climbing in value simply because there is not enough of it.

Mr. Fuller reports that the regions surrounding Washington have drawn 287,000 jobs to the area in the last five years. However, the Washington region is not providing houses for all these people.

This year, there’s a deficit in housing in this region of 463,300 units. That means that while people can take jobs here, they won’t be able to live near them. They’ll have to commute from a couple of hours away.

The numbers don’t get any better, Mr. Fuller says. By 2030, he projects a shortfall of housing in the Washington area of 716,100 units.

So, squealers, where’s the bubble?

The term being used by journalists is left over from the stock market’s inexplicable rise in value when nothing but hype drove the market. Companies were raising lots of venture capital and creating products they couldn’t sell, meaning that they ate through the borrowed funds and finally burst.

In hot real estate markets, there’s no hype.

There are real jobs being created by real companies, creating real products and selling them to real consumers.

Real money is being made, and these real companies need real employees to make it happen.

We need real houses to put them in. If you want to quell the fear, build more houses.

Now, would all the squealers please stop? You’re giving me a headache.

M. Anthony Carr has written real estate since 1989. He is the author of “Real Estate Investing Made Simple.” Post questions and comments at his Web log (https://commonsenserealestate.blogspot.com).

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