Is there a housing bubble?

This question requires an answer to another question: where?

Looking at the Dallas/Fort Worth Metroplex, I'd say we don't have a housing bubble; well, maybe just a little one in a few spots. As a whole, prices have not gone crazy here as in parts of the Far West or the Far East of the U.S.

The government says we have about a 3% inflation rate; that's excluding energy and other real necessities, so let's call inflation 6% to 7%. The cost of a $100,000 home a year ago should be about $107,000 right now (that's not appreciation but the "hidden tax" that is overprinting of money by the Government). Generally speaking, that's about where we stand in the market right now; therefore, we don't have a bubble. That does not mean that if we end up with excess inventory we might not have some price adjustments on some properties. That would be especially true of many new homes that are often sold at a premium over the price of a similar used property...generally speaking.

Where are the bubbles? The North East, the Far West, places like Las Vegas, where they've had 20% to 30% yearly increases in prices are real bubbles. Like a friend from California told me last month, "I could not buy my house right now if I had to." If he can't buy it, lots of other people can't buy it. People who have overpaid for houses in bubble markets will pay the price when it comes time to sell; and that's when a bubble deflates.

Will anything save them? Yes, higher inflation...and that could be coming.