Housing bubble? Trouble ahead for urban developments?

The idea for this thread came to me from the '2006 California home prices' thread, but I hope this thread applies more to cities/regions throughout the country and asks some different questions. As most of you know, home prices in many urban centers (and some rural/suburban areas as well) have rapidly gone up in the past 5 years. Some economists believe that the US housing market is in fact in a "bubble", that is to say that the current high prices are fundamentally unsustainable and have been artificially pushed up by investors and speculators who sought to make quick income out of rising equity (the difference between the money you owe on a house and the current market rate). Obviously many individuals disagree, particularly those in the Real Estate industry. Some worrying trends however are: -Prices for homes have started to go down in many formerly "hot" cities, such as San Diego where in a year to year comparison homes are actually starting to become cheaper this year compared to last, thats bad news for those who were relying on rising market prices -Most new homes are financed on adjustable-rate mortgages, with rising interest rates from the Federal Reserve this means higher payments for most, which could throw some people into financial trouble -Nationwide, home inventories are at an unprecedented rate Most economists agree that this is going to lead to a market correction, the difference is whether this will be a soft correction (that is, prices go down slightly) or a major one. My first question is: what side do you take/believe? Secondly: for those of you who have recently purchased a home or are in the market for a home, have reports about a possible housing bubble effected your decision(s) at all? Some of you may be saying: "this is an urbanism forum, what do we care about homes, we care about CITIES!". Actually, this thread has everything to do with our urban landscapes. One of the home sectors that has the highest amount of inventory coming on market and seems to be most overvalued is the condo market. I know for a fact that many, if not most, of the proposed towers and high-density developments that we value in cities such as Los Angeles, Miami, Dallas, N. Virginia and even other cities such as Chicago consist of residential and condo towers. If there was a major setback in prices or slowdown in sales (especially in the condo sector) then many of these proposals would probably be scrapped as un-economical to the development companies. How does everyone feel about a possible slowdown in urban construction? Do you think urban developments would be effected? How would your city be effected? My final question is to those who don't live in urban environments. Even if only extremely pricey markets had a severe correction, home prices throughout the country would probably take a tumble, would this effect you and how? Also many job markets are dependent on home construction and expansion, meaning if there is a bubble "pop" then many jobs would likely be reduced, are you worried at all? Here are some troubling news items: DALLAS http://www.wfaa.com/sharedcontent/dw...os.f46e94.html Quote:> Originally Posted by WFAA.com > Dallas' high-rise condo boom appears to be peaking. With construction costs soaring and investors pulling out of the housing market, several residential tower deals have been killed and others are in doubt "Construction costs have risen a lot faster than sales prices of condominiums," said Jonas Woods, president of Victory developer Hillwood Capital. "That's why you are seeing some of these projects get canceled." Developers of the 16-story Maple Terrace condominium project last week shut down sales, which hadn't hit targets. [...] "A lot of folks are stepping back and looking at their options because of what is going on in the market." What's going on is that investors – many of them from out of state – are abandoning the housing market. Economists and builders credit the investor pullback with causing most of the nationwide downturn in home sales this year. The declines have been worse in markets such as California, Florida and Las Vegas, where dozens of condominium deals have been canceled because of slumping demand.> >New Jersey http://www.thnt.com/apps/pbcs.dll/ar...607260449/1001 Quote:> Originally Posted by Home News Tribune > The inventory of unsold homes rose to a new record of 3.725 million units, which is a 6.8 months supply at the June sales pace. That is the longest period required to exhaust the overhang of unsold homes in nearly nine years. [...] Bill Hanley, president-elect of the New Jersey Association of Realtors and the manager of Weichert Realtors' Metuchen office, said the ratio of homes available changed from 10 buyers for every house a year ago to 20 houses for every buyer this summer. That has lessened the pressure on buyers to make a decision on a purchase, he said.> >Orlando http://www.orlandosentinel.com/news/...owth-headlines Quote:> Originally Posted by Orlando Sentinel > Braving a cooling real estate market and volatile construction costs, developers of the 24-story Monarch condominium tower in downtown Orlando said Thursday they will launch sales in September with an eye toward starting construction as quickly as possible. [...] During the frenzied real estate market of recent years, 29 condo towers with a combined 7,000 to 8,000 units have been announced for locations in downtown Orlando. Most of the projects have been postponed, however, because of the softening market and because of fast-rising construction costs.> >Washington, DC and misc. http://www.washtimes.com/business/20...2200-9309r.htm Quote:> Originally Posted by Washington Times > The high-flying D.C. and Northern Virginia real estate markets, which led the boom in the Washington area, also are leading the decline with small price losses in the past year, according to local Realtor statistics. Prices continue to rise for single-family homes in Montgomery and Prince George's counties. [...] Job opportunities, which stagnated in the Washington area in the past year, are declining in housing-related areas such as architectural and engineering, according to a Monster Employment Index. [...] Some industry observers fear the fast-declining housing sector, which enjoyed only a weak revival during the traditionally strong spring selling season, is headed for a bust this fall when sales and prices typically decline from high-season levels. "August will begin the buyers' market," said Donna Evers, president of the real estate brokerage Evers & Co. "Buyers should do their homework now and get their finances in order before jumping into a purchase." Robert Dye, analyst with Economy.com, said areas where housing soared the most are the ones most likely to see outright price drops in the months ahead. Among the areas where he sees a "risk of correction" are the Washington area, California, Florida and Arizona.> >Arkansas http://www.nwaonline.net/articles/20...728skyline.txt Quote:> Originally Posted by Morning News > There were 19,326 lots in 255 Northwest Arkansas subdivisions in March through May, or enough lots for 41.9 months, the Skyline Report said. An additional 19,783 residential lots have been approved by citiesÂ' planning commissions. That brings the total lot supply to 39,109, or enough new lots to supply the area for 8.86 years.> >Miami http://www.local10.com/news/4277615/detail.html Quote:> Originally Posted by Miami Local10.com > The skyline of Miami is changing by the day as new condominiums go up, with thousands of new units being added this year. But the question many are asking is: Will this condo-building boom soon be a bust? Real estate experts said many buyers are just looking for short-term profit, not a place to live. They're called "flippers" because they sell their condominium contracts before or right after they've closed for a fat profit. [...] One large bank has just downgraded the stock of WCI, one of Florida's biggest builders, fearing that too many buyers won't be able to close on their units if the real estate bubble bursts. [...] The market is too wild for some -- like Raymond James and Associates. Company representatives said that "as much as 85 percent of all condominium sales in the downtown Miami market are accounted for by investors and speculators."> >http://www.miamibeach411.com/finance...ondo-flipping/ Quote:> Originally Posted by MiamiBeach411 > Experts are saying that if the market declines, Miami may again be at the center of a condo bust. There are more than 64,000 condo units under construction or in the planning stages, according to the cityÂ's monthly development report. There were 11,000 units under construction, 23,000 approved and 30,000 in the preliminary or application phase. Fort Lauderdale has 6,000 new condos planned for its downtown and West Palm Beach will add 6,000 new units to their downtown and along the Flagler corridor. Also, apartment buildings being converted to condominiums will add thousands more units to the South Florida condo market. > >Thoughts? Opinions?>