Prices Going Up Because People Believe They Will Keep Going Up Is The Definition Of A Bubble

A report from the Page Valley News in Virginia. “Over the last six months, Page County saw its first double-digit drop in home sales since the housing boom fueled by the COVID-19 pandemic began five years ago. In the past seven years, home prices in Page County have more than doubled — rising by nearly 103 percent. In 2018, the average home sold for just $173,272. While Page County has consistently had the lowest average home values in the Northern Shenandoah Valley, it has now risen to nearly equal footing with Shenandoah County, who reported an average sold price of $378,735 in the first half of 2025. As of this week, there are about 95 active listings for homes in Page County — that’s up from about 75 six months ago. ‘I feel that we are seeing slower sales due to several factors,’ said longtime Luray Realtor, Bill Dudley. ‘In the big picture, our current rates are really not that bad and we have seen much worse, but home buyers saw 2 and 3 percent [interest rates] over the last few years… but I just don’t think we will see that again. I can remember in Page County when a home sold for $100,000, which was a really big event. We are starting to see more adjustments in listing prices downward, as some listings start to stay on the market longer.'”

Fox 47 News in Michigan. “Home prices in the Lansing area are decreasing and houses are staying on the market longer, potentially creating better opportunities for buyers who have been priced out of the market. Local realtors say buyers have finally pushed back against continuously rising prices, leading to price reductions across the region. ‘We’re starting to see houses sit on the market a little longer,’ said Robert Dowding, a realtor with Keller Williams. Dowding says the market dynamics have shifted over the past three months, potentially creating better opportunities for buyers. ‘You’re starting to see some price reductions which is going to be really good for buyers. Prices just kept getting pushed up and up and up and buyers said no, it’s enough,’ Dowding said.”

From Spectrum News. “Active listings increased for the 21st consecutive month, homes took longer to sell and the majority of houses in large U.S. metros saw price declines, according to Realtor.com. In July, 33 of the country’s 50 largest metropolitan areas posted price declines compared with a year earlier. Prices were down by the largest amounts in Miami, Chicago, Los Angeles and Austin, Texas. The median list price for a home in Miami is currently 17.8% less than its peak in July 2022, while the median price in Austin is now 14.8% lower than two years ago. While housing inventory increased in all parts of the country, price cuts were most common in the South and West, particularly in Austin, Denver and Portland, Ore. ‘In the South and West, we’re seeing clear signs of a shift toward buyer-friendly conditions — more price cuts, rising delistings and homes sitting longer on the market — which has led to sometimes sizable price adjustments since 2022’ Realtor.com said in a statement . For every 100 new listings, 21 homes are pulled without being sold. Miami leads the country with the highest ratio of delistings, followed by Phoenix and Riverside, Calif.”

The Gilbert Sun News in Arizona. “June wasn’t a great month for Gilbert home sellers as the median and average prices of the 276 houses sold both fell slightly from what they were a year earlier. Phoenix Realtors data showed that the median price of the 153 homes that sold in Gilbert last month was $600,000 – a 3.8% decline – while the average price of $734,005 was a 3% drop from June 2024. The inventory of homes for sale in Gilbert stood at 927 in June – 61.8% above the June 2024 tally. The Cromford Report said early this month that July seemed to be producing some hope for sellers. ‘We saw a significant number of cancellations and expirations at the end of the second quarter, meaning we have less supply as we start the third quarter. Listings under contract are up compared to a year ago as buyers react to a slight reduction in mortgage rates,’ it continued. ‘This is genuine good news. They may also be reacting to falling asking prices as buyers inject more realism into their listings. The good news on supply and demand is welcome,’ the Cromford Report said, noting that its Valleywide index for determining whether the market is tilting toward sellers and buyers is significantly tipped against trying to unload a house. ‘Many of these expired and cancelled listings are likely to come back again in the fourth quarter, although we know of several that have been converted to rental listings instead.'”

Fox LA in California. “It’s bad enough to lose one home to a fire, as so many did in the Eaton and Palisades fires. Imagine five houses destroyed and another one so damaged, it’s unlivable—all in the same family! That’s what happened to Tina Johnson. Altadena residents for three generations. That’s when the nonprofit The Change Reaction stepped in. Founded in 2019 by Greg and Jodi Perlman, they specialize in providing much-needed cash infusions for people who find themselves in unexpected situations. ‘I don’t know where we’d be without them,’ says Tina. ‘From cash for groceries to replacing our burned vehicle,’ she adds. Both she and her husband are retirees, who still have to pay the mortgage on a home they can’t live in, while renting another place, while still waiting for their insurance to send them a check.”

The Escondido Times-Advocate. “You may have seen recent headlines suggesting the State of California is finally making it easier to build housing. Don’t be fooled. Despite the spin from Sacramento, the so-called ‘reforms,’ just signed into law by the Governor, do nothing to make it easier for young families to own a home, raise kids, or stay in the neighborhoods they grew up in. In fact, these new laws double down on the same failed approach that got us into this crisis—prioritizing high-density apartment blocks over single-family neighborhoods. Here in San Diego County, we understand the real problem: it’s not a lack of land, it’s a lack of common sense. Over 500,000 young people have left the state in just four years. And yet, Sacramento’s answer is less local input and control, combined with more regulation, more mandates, and more subsidies for apartment complexes that cost up to $600,000 per unit—sometimes for a studio. We don’t need luxury ‘affordable housing’ projects that include gyms, cafes, and pet spas. We need starter homes—on real plots of land, with a front yard and room for a family.”

The Toronto Sun in Canada. “Those considering purchasing a condo for investment purposes may want to think twice, or at least, wait until the market recovers. One condo owner, who asked not to be identified, said he’s lost $140,000 when calculating all carrying costs including maintenance and lawyer fees and mortgages costs. The owner had purchased a one-bedroom-plus-den condo in Scarborough for $489,000 six years ago when the market was at its peak. ‘The few renters I could find weren’t willing to pay what I needed to carry the mortgage,’ he says, adding he could not keep the investment going any longer because carrying costs vastly outstrip earning potential.”

“But that isn’t necessarily a bad thing, according to John Pasalis, president of Realosophy Realty, who reminds that housing isn’t supposed to be speculative. ‘Falling prices and rents should be a sign of success. Instead… they’re being framed as a crisis,’ says Pasalis. ‘The truth is we haven’t built a housing system designed for affordability. We’ve built one designed to preserve rising housing prices — at all costs.'”

The Financial Post in Canada. “From 2001 on, house prices in the Greater Toronto Area (GTA) rose at almost eight per cent per year. That continued for two full decades. At their peak in February 2022, prices were five times higher than in 2001. In 2001, the GTA had a price/income ratio of 3.0, which was judged ‘affordable.’ In 2020, however, the ratio was 8.6, which the report judged ‘severely unaffordable.’ In 2021, it reached 10.5, which qualified for ‘impossibly unaffordable.’ The ratio has since declined to 8.6, however, and Toronto is back to only ‘severely unaffordable.’ The usual narrative is that: Demand for housing rose because population and incomes grew and mortgage rates fell. It’s a logically consistent story but it doesn’t fit the data. In fact, supply growth did keep up with population growth. The number of Torontonians per Toronto dwelling actually fell slightly from 2001 to 2021.”

“Nor does the usual story explain why people would keep buying houses whose prices were so high as to be ‘severely’ or even ‘impossibly’ unaffordable. Something else must be going on. And it is. A house isn’t just a place to live. It’s also an asset. If you expect house prices to go up eight per cent next year, your capital gains could easily exceed your out-of-pocket expenses. And so people keep buying even impossibly pricy housing so long as they expect prices to keep rising. Prices going up because people believe they will keep going up is, unfortunately, the definition of a bubble. Bubble prices cannot be explained by demand/supply fundamentals. By that criterion, it’s pretty clear that Toronto has been experiencing a housing bubble.”

From Shafaq News. “Sales across Iraqi markets have fallen by more than half, the Baghdad Chamber of Commerce reported, attributing the decline to weakening construction, investment, and consumer spending. Chamber spokesperson Rashid al-Saadi revealed to Shafaq News that real estate activity has nearly ground to a halt. Economist Ahmed Abedrabbo described the current phase as one of clear economic contraction. ‘Without swift policy action, this stagnation risks sliding into a deeper recession,’ Abedrabbo told Shafaq News.”

The Bangkok Post in Thailand. “Competition for land purchases in Greater Bangkok has slowed as housing inventory rises, sales decline, and developers pivot to clearing unsold stock to generate cash amid the worst market conditions in two decades. Tritecha Tangmatitham, managing director of SET-listed residential developer Supalai, said it was the first time in his 16 years in the business that there were no competitors bidding for land plots. ‘At our most recent land acquisition meeting, there were 30 plots we were interested in,’ he said. ‘We asked if any other companies were also looking at those plots, and the answer was zero. None of the 30 plots had any competitors.'”

“The number of unsold units rose to 237,571 with a combined value of 1.45 trillion baht, an increase of 11.4% in volume and 18.6% in value, respectively. REIC projected the time required to sell this inventory would rise to 64 months in the first quarter of 2025, a surge of 60% from 40 months in the corresponding period of 2024. ‘Some developers are putting land up for sale because they can no longer issue debentures. Their growth has been debt-driven, which is unsustainable,’ said Pairoj Wattanavarodom, managing director of SET-listed developer Eastern Star Real Estate. ‘This is undoubtedly the worst residential market in 20 years,’ said Mr Tritecha. ‘The market’s peak was in 2017, with 120,000 units sold annually in Greater Bangkok. Today, that number has dropped to 60,000 units per year. It might recover to 80,000 or 100,000, but not 120,000.’ He said the 1997 Asian financial crisis was the most severe period for Supalai. While the current situation is not as bad, Mr Tritecha said it’s not far off.”

From Gulf News. “From slashed prices to ₱150,000 ($2,573) gift certificates (GCs), Philippine condo developers are pulling out all the stops — and then some — to sell off ready-for-occupancy (RFO) units amid still-high vacancy rates in Metro Manila. According to Colliers Philippines, RFO inventory dropped to 30,500 units in Q2, driven by never-before-seen promotions aimed at reviving a sluggish market. ‘We haven’t seen promos as aggressive as this,’ said Richard Raymundo, Colliers’ managing director, told local business news site Bilyonaryo. ‘Before it was like 10%. Now, it’s like 45, 50% discounts and you can extend the terms.’ Vacancy in the secondary residential condo market of Metro Manila stands at a worrisome 25%, and Colliers forecasts it could hit 25.8% by yearend, up from 23.9% in 2024. This is due largely to a new wave of project completions flooding the market.”