The housing bubble – believe it or not – bubbles on, along with die-hard aficionados who are willing to gamble on another surge in prices following the recent rate cut.

Last night, I was talking to an acquaintance, a one-time computer consultant at the World Bank,  just back from the Carolinas to the suburbs of our great capital.

“Expensive?” I asked sympathetically, thinking he was planning on renting a condo. “Yes,” he replied. And then added he was buying….a single family house.

How did that work, I asked. Wasn’t McLean (VA) property some of the most expensive in the country?

“Maybe,” he said. “But McLean’s rolling in money. You buy a shed here and it goes up 25% in a few months.”

I remember someone telling me that. But that was a long time ago….in 2002. This is 6 years later.

McLean is still going up?

Oh yes, he said confidently ( he is as smart as they come).

“I’m going to get myself a loan from a Pennsylvania bank – the rates are better there. Then I’m going to buy a house here. For $700,000. Putting down between 0 and 10%. And sell by the end of the year…before my visa runs out…”

It was like listening to the exploits of Jesse Livermore, or some other titan of speculation.

But fortunately, there was this to bring me down to earth:

“I have been covering the housing bubble in McLean, VA through covering one house located on Great Falls Street. It has been over a year and the house remains unsold. (The last post on that house can be found here.) The house has not been listed in the MLS for months, but remains unsold.

There is a similar-sized house two doors down also for sale, but about $100,000 cheaper since they reduced the price in February. Also, on the corner of the same block is a house that has been for sale for a month or so. The price was reduced once already after the first weekend’s open house and now, it is scheduled to be auctioned this Sunday.

Don’t be fooled by the sign. The owners never lived in this ‘home’. They bought it a couple of months ago and after doing a quick renovation, are now trying to flip it. I am sure that it does not help having the house next to it up for sale, for less. In fact, the neighbor appears to have reduced their price in response to the auction being held next door. Those familiar with the area will agree that an auction in this area has been until now unheard of.

To their credit, it seems that for good or bad, they are very motivated to exit this property. Lets see if they accept an offer, if anyone bothers to give one.”

From Fred Fry.