Is the bubble about to burst? Not likely: OPINION

While the high-end market booms, the rest of the market is still chastened

TRD New York /
Oct.October 10, 2015 04:00 PM

Real estate records are being set left and right. Listings in NYC are pushing past the $100 million mark, and office space is leasing as high as $300 a square foot. But does that mean a bubble is building? Probably not, argues Bruce Batkin CEO and co-founder of Terra Capital Partners.

In a Barrons piece, Batkin claims that while the top of the market has in many cases surpassed the peaks of the last bubble, the rest of the market is still catching up.

“These price increases have been fueled by investors’ search for yield in a low interest-rate environment and by foreign investors seeking a haven and diversification,” he writes. “Some see this as a sign that U.S. real estate is repeating its climb into bubble territory and is headed for another crash.”

But, he says, outside of the luxury market, home prices have actually risen at a slow pace, and have not fully recovered from the downturn. And according to the S&P/Case-Shiller Composite 10-Home Price Index, home prices remained 15 percent below their April 2006 peak as of July.

Moreover, new-home construction is not back to where it was before the recession. Currently, there are 739,000 new single-family starts annually – 60 percent below the 2006 peak.

“For investors, the message is clear,” Batkin concludes. “Nearly 10 years after the bubble began, they will find a chastened and more disciplined market in which to participate.” [Barrons]Christopher Cameron


Related Articles

arrow_forward_ios
Left, Xi Jinping in October 2013; right, UBS Chairman Axel Weber. (Credit left to right Antilong Wikimedia Commons; Policy Exchange; back photo by Ministério da Indústria, Comércio Exterior e Serviços)

Davos recap: China’s winning and watch out for correction

No American cities made USB's annual "bubble risk" index this year, though several of the U.S. cities like San Francisco, LA, and, of course, New York are in the midst of local housing crises. (Pixabay)

Here’s why American cities are safe from housing bubble speculation

UBS' annual Real Estate Bubble Index uses historical and current data to locate possible global housing bubbles. In 2017, there are eight bubble risks. (Pixabay)

Bubble risk: Watch out if you’re investing in one of these eight cities

From the archives: How high can it go?

From the archives: How high can it go?

A man looks out from an opening in a wall as residential buildings stand in the distance in the Jiading district of Shanghai, China, on Monday, April 11, 2016. China's economy stabilized last quarter and gathered pace in March as a surge in new credit helped the property sector rebound while raising fresh question marks over the sustainability of the debt-fueled expansion. Photographer: Qilai Shen/Bloomberg via Getty Images

Fears are mounting that China’s housing bubble will burst

New York City not in danger of housing bubble: UBS

New York City not in danger of housing bubble: UBS

There’s one big reason why this housing bubble “can only go so far”

There’s one big reason why this housing bubble “can only go so far”

“This is a bubble. A very big bubble. And it is going to end in tears”: Economist

“This is a bubble. A very big bubble. And it is going to end in tears”: Economist

arrow_forward_ios