With home prices up in a number of areas around the country, it's not surprising there has been talk about a housing bubble. On average, single-family house prices have risen 50 percent nationwide over the past five years. That's meant record profits for homebuilders, even as some economists have said the current run-up in housing prices in certain markets is probably not sustainable.
In Olney, Md., a suburb near Washington, Chuck Ellison is building a group of million-dollar homes.
Ellison says the last few years have been good ones, and when he gets together with other builders they joke about their good fortunes. House prices in the Washington area have risen nearly 100 percent since 2000. Properties like this one are being sold even before they're completed. That's one reason Ellison is confident.
After surveying the hottest housing markets, the mortgage insurance company PMI came to the conclusion that there's a better-than-even chance of price declines in a half-dozen markets.
Chuck Ellison hopes the economists who see a bubble popping are wrong. As long as interest rates remain low, home buying will hold up, he says. Although Ellison does expect the housing market to cool. As for the immediate future, he says his company plans on building just as many new homes next year.
But Wall Street has been signaling it's increasingly worried about the housing market in the future. Despite the recent record earnings from many large home builders, a number of building company stocks have moved lower in recent months.
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