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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: microhoogle! who wrote (28257)	3/17/2005 12:01:00 PM
From: Jim McMannis	Read Replies (1) \| Respond to of 306849

James Stack, the president of Montana-based Investech Research, warned of a stock-market bubble in the late 1990s and now expects the worst for housing. "Bubbles do not pop simply because the prices get too high. It takes an external event to start to let the air out of that bubble, and in many cases that comes from central bank policy, raising interest rates," Stack said. "If we were to see long-term rates rise by over a percentage point, then you are going to see a toll starting to be taken in real estate." The average real estate cycle is roughly twice as long as a stock market cycle, Stack said. That means that a bursting bubble wouldn't be felt immediately, but would be felt longer, probably for about eight years. "I wouldn't feel so strongly about real estate being at a risky stage if not for what we are seeing in the Flathead Valley" of Montana, he said. There, dozens of $4 million vacation homes are being built on 5-acre parcels. "Ten years ago, a $4 million home would not have sold in an entire year. How crazy is that?"