As interest rates have increased, mortgage refinancing has slowed down, hurting companies such as Washington Mutual
Home prices have continued to increase, and the rate of price increases also continues to accelerate. The Office of Federal Housing Oversight recently released its house price data for the first quarter of 2004. U.S. home prices rose 7.7% over the first quarter of 2003.
Further, the rate of price increases has been steadily increasing since 1990. The 7.7% yearly price increase in the latest quarter is greater than the 2000-2004 average of 7.3%. And the average yearly price increase since 2000 is higher than the average for the second half of the 1990s of 4.0%, which is in turn significantly higher than the average of 1.9% for the first half of the 1990s.
Activity and interest in real estate also appears to be heating up on Wall Street. In the last few months, both Citigroup
Finally, housing stocks such as KB Homes
All of this indicates to me that the real estate bubble is alive and well. Like all bubbles, it will eventually burst. The longer and bigger it grows, the more painful the bursting will be.
Fool contributor Salim Haji owns a home in Denver, Colo., but does not own any of the stocks mentioned in this article.
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