Real Estate Creating Economic Questions

For those living in the US and specifically in coastal states, we all know how the real estate market has gotten so out of control lately. As you can see in this bit from San Francisco magazine which was written at the end of 2003, the market has been hot for quite some time. But as you can also see in this bit from the SF Chronicle, the market has cooled a great deal in recent months. Notice that it hasn’t died, just cooled. Somehow prices continue to increase.
Just today though, I came across a BBC article about the possibility of a Spanish property crash looming on the horizon. They’ve had a good run for some time there, but the parallels between it and the American (specifically, Californian) market are rather scary. It definitely seems poised to go and I think that the fact that most of the economic growth seems to be centered around the growth in property, it’s going to be bad. Unfortunately for the US, we’re in nearly the exact same boat with what I’ve heard to be around 3/5 of the recent growth in the economy based on real estate. But of course, no one wants to talk about that.
While it’s easy to draw theoretical conclusions from this and shrug it off as out of our hands, I can’t quite shake it. I suppose it’s because I had family visiting from Bend, Oregon last week who said that the situation there was a lot like San Francisco with all these people who seemed to suddenly have money out of thin air. In reality they all have money from selling their places in California and moving up to Oregon where the market is slightly cheaper. Sure, there is something of a cushion, but people forget that money runs out and things change. So many folks have bought with these damnable adjustable rate mortgages and are about to get spanked badly with any slight downturn in the economy.
But, back to the BBC article and the fact that they make one very good point in that people only need so many houses. This is a finite market with a saturation point that it seems we are quickly approaching, or maybe we’ve hit it already and no one really wants to talk about it, because honestly, it’s a serious bummer. I guess for myself personally, it’s good that I didn’t buy property and more importantly didn’t buy speculation property to flip as so many have here. Obviously, time will only tell with this, but maybe while in Europe, will be a good time to buy there? I can’t tell you how badly I’d love to say an emphatic yes, but know better.