ANCHORS: SUSAN McGINNIS
REPORTERS: VINCE GONZALES
SUSAN McGINNIS, anchor:
Well, SUVs may not be selling, but the housing market is red hot. Still, experts caution, what goes up, must come down. Vince Gonzales reports.
Mr. TOM DAVIES: But again, you have the high ceilings, you know.
VINCE GONZALES reporting:
Last summer, Tom Davies bought this Los Angeles home for $670,000. He's still remodeling.
Mr. DAVIES: I did the fireplace. I did the windows. And that's all I did in here except for the arch opening.
GONZALES: But just a year later, his home's value has skyrocketed.
Mr. DAVIES: It was just appraised at $1.1 million.
GONZALES: He's isn't alone. Owners in hot housing markets across the country are seeing double-digit annual percentage increases in the price of their homes. But despite the high costs, demand is rising.
Ms. TRACY KING (Realtor): Lots of French doors.
GONZALES: Realtors say buyers who once thought prices would drop are now fighting to get into a home before they get left out.
Ms. KING: They thought all last year there was going to be a bubble. And then they said, 'It's not a bubble. So I guess I'd better just jump in.' And that's--they're jumping.
GONZALES: So is this a bubble? Despite the irrational prices and desperate demand, economists say that may be too strong a word to describe today's market. But it is overheated, and they caution the wild ride may come to an end.
Mr. STUART GABRIEL (Economics, USC)color>: The rates of house price increase that we've seen in the last couple of years in coastal California and in the Eastern seaboard and the like cannot persist.
GONZALES: A tight housing supply and record low mortgage rates are fueling this white hot market. But experts predict rates will continue to climb through the year, cooling the market down. And buyers may not be the only ones affected. Homeowners with adjustable rate mortgages may also be in for a surprise. And until prices peak, in some markets a man's home could continue to cost as much as a castle. Vince Gonzales, CBS News, Los Angeles.
McGINNIS: Straight ahead, your Monday morning weather. And in sports, the Kings target Kevin Garnett and the Timberwolves in a crucial game six.
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