There's been alot of talk (and print) lately about a possible "housing bubble".    Basically what this means is there is concern that the ballooning in the price of homes and sales activity could cause the "balloon" to burst.  Do I think this is going to happen?

My opinion is this:  For Wenatchee real estate (and surrounding areas), we will not see the housing bubble burst.  Historically, in Wenatchee, we  go through a period of steep price increases followed by a leveling off period of a few years.  Then, some economic factor will create the climate for  another increase in prices, followed by another leveling off period.  This is a long standing historical pattern that will probably continue... in my opinion. 

The current incline has lasted longer than normal and may continue for a while yet.   According to statistics I used in a recent post, our median price is still $75,000 below the state average.  We are in the enviable position of being an area where a lot of second homes are sold.  With the "baby boomers" retiring, we are getting quite a bit of activity from people planning to retire in our area.    We also have a very diverse economy (also discussed in an earlier post), so we have good paying jobs to attract workers for the primary residence market. 

We could, however, see a leveling off in the not too distant future.  There are hundreds of new homes being constructed as I write, which will help supply meet the demand.  This will probably not affect activity, but could (and should) cause price increases to slow.

I do, however, feel certain markets across the country could see a significant flattening, and possible decline, in home values when demand slows.  Southern California is a good example of where I think this could happen.  I can only look at it from my personal perspective.  If I owned a home in Southern California with $500,000 or more  in equity, I would be mighty tempted to sell out and move to an area, like Wenatchee.  In Wenatchee I could buy a nice home and still have money to invest in some sort of income producing property to supplement my income.  

Just my thoughts...