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BigChiefEugene
@
2012 Jan 29, 11:39am
These cities have people with massive wealth including the native born and foreigners who have abandoned interest paying instruments and have put their money into real estate because of very low mortgage rates. Prices will drop precipitously if and when interest rates on five year certificates of deposit exceed 6% and mortgage rates approach the 100 year average rate -- the mentality in these cities is that this will never happen and the people betting on real estate may be right on.
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There may be a few other "it's different here" cities, and prices have come way down in the edges of these markets, but 4 years into the bust and prices in these fortress cities haven't returned to anything near pre-bubble prices. Will they ever or is this just the new normal?
#bubbles