From today’s Washington Post – a very good analysis of the Washington metro market. Many of the conclusions/assertions can be applied to our regional market.

It’s another insane spring in the local real estate market. As the prime season for buying and selling unfolds, very few homes are for sale, prices are climbing rapidly and desperate would-be buyers are bidding feverishly against each other.

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But now the question comes up more and more: How long can this last?

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“One of the signals to watch out for with a bubble is the percentage of homes being sold to investors,” said Susan M. Wachter, professor of real estate at the Wharton School of Business at the University of Pennsylvania. “The only problem is that once you notice some of these signs, it’s usually too late.”

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To afford ever-pricier homes while keeping monthly payments under control, buyers are routinely taking out interest-only loans, adjustable-rate mortgages or even negative-amortization mortgages, where a buyer borrows more than the purchase price of the home, something that worries even the most bullish of housing economists and builders.

There is much more to this article than the few fairly significant snippets here. Locally, our market is a tough one. Prices are increasing at a good pace. Investors comprise a large part of (guessing >20%) of the market and, most importantly to me, most of my Buyers are not local. They are coming from other markets, with their New York, Boston, California money and thereby pushing prices even higher.