This historic town has an interesting housing market.
It is a small, prosperous town known for its culture and beautiful location— a little over an hour to reach it by car from the nation’s capital. The train station is close to town and many commute to work. It’s a town, that attracts primo cultural events, theater and festivals, poetry, music, jazz, and photography. It’s an old town with grand old buildings, some built of stone, others of brick.
And how is the housing market going? Surprisingly well. House prices have been rising around 10–15 percent a year for the past five years. Interest rates remain low, around 5.5 percent, and buyers are taking advantage of these low rates.
Are we talking about Shepherdstown? Sadly not. The little historic town I’m talking about is Marlborough, England. A sleepy market town in the Wiltshire, home also to fabulous Stonehenge, Bath and Lacock Abbey, where much of the Harry Potter movies have been filmed.
Why are house prices soaring in England? For the same reasons they are falling in the USA. Some English property experts say the strong housing market is largely due to the huge migration from East European countries to England. Over 600,000 people have moved there in the past five years, increasing the numbers of buyers in the market. 
Other opinion-makers say the price increases are due to the low interest rates. Still more say that housing prices are climbing as a result of a tidal wave of amateur investors who are storing their money (as well as their banks’ money) in the real estate market through what is known as “buy-to-let” schemes, known here as rental properties.
Will the British property boom come to an end soon? Many say yes. The Bank of England has raised interest rates yet again this month. Developers have over-built residential apartments and homes, resulting in an over-supply of housing. And banks are clamping down on lending money to people with poor credit history. Any of this sound familiar?
Interestingly, when I talk to my friends in the U.K. and warn them that their days of unlimited growth and prosperity may come to an end, rather more quickly and painfully than they care to anticipate, almost all scoff at my stories of doom and gloom. They tell me that the market can bear continued growth, continued inflation, continued expansion. When I point to the example of the currently flat U.S. housing market, they are quick to point out the differences: a weak dollar, weak economy, huge national debt, and depressed population teetering on hari-kari over the Iraq War.
I’m not so sure. The Brits should watch out. They should learn the lessons of the American market, which came to such a surprisingly grinding halt so swiftly at the end of 2005 at the hands of a quadruple whammy—collapse of the sub-prime market, over-supply of housing stock, climbing gasoline prices (affecting the housing market for commuters), and rising interest rates.
And how is our little corner of the real estate market doing these days? June’s data for the housing market in Jefferson County continued to be weak compared with 2005. The total volume of residential homes sold (generated by adding all the prices of the homes actually sold during the month in question) in June 2007 was close to 56 percent of that sold in 2006 and 40 percent of 2005 (see figure below).
Meanwhile, the key indicators of the health of the housing market continued to be poor: an increase in the number of homes unsold, rising interest rates, and a decline in the number of contracts on houses.
Therefore, while the Brits maybe cruising towards a bruising, perhaps the Yanks (especially those in Jefferson County, W.Va.) are still bruising while cruising.