A real estate boom or real estate bubble is an abnormal condition where a property market either increases in value rapidly or decreases in value slowly over time, usually following a housing boom. A real estate boom is the sudden increase in the value of property like housing before they reach unhealthy levels, which eventually decline and fall.
Real estate values can vary by thousands of dollars per property. The most recent housing boom is now coming to an end. While there are many factors that contribute to this decline, the biggest contributor seems to be the Federal Reserve, and specifically, Ben Bernanke, the current Federal Reserve Chair. If the Federal Reserve raises interest rates, which it has been doing consistently for several years, this will cause an increase in housing prices, which will result in a real estate bubble, which is exactly what we are seeing at present.
Real estate prices are not set in stone. They can go up very quickly in a short period of time. There are a lot of people who want to invest in real estate and have bought property that has increased in value very quickly.
Because Bernanke has been in the position he is in, he is being a lot more conservative in terms of raising rates. There may be some short term benefit to having a higher interest rate than you would normally get but if the rates stay low, the bubble will eventually burst and real estate prices will fall.
Real estate bubbles are the result of the demand for property to be in excess of the supply. This can happen when the economy is experiencing a recession or in an uptrend and it is harder to find a property to purchase.
If you look at the last few cycles, which I have studied, you can see housing prices either going up rapidly or going down very rapidly. Right now, the housing market is in the uptrend. One reason why housing prices are increasing so rapidly is because home prices in many parts of the country have reached a point where people can afford to buy them. Another reason why prices are increasing is because there are so many foreclosed properties that are being sold on the secondary market.
While real estate has been on a bubble for a long time, many economists think that this time the bubble may burst because there are too many properties in the country and not enough buyers. Many experts believe that when prices begin to decline, there will not be enough buyers. In other words, the demand for homes will be greater than the supply.
Real estate bubbles are common. When they burst, many times they can lead to a severe financial crisis, which is why it is important to remain realistic about how much money one is willing to risk on real estate.
What makes the real estate bubble more serious is the fact that the price will be determined by the values of the houses that are located in different parts of the country. If one city experiences an economic boom, the prices of homes will rise. If one city experiences a crash, the prices of homes will fall. Therefore, when the economic outlook looks good there will be a lot of people selling houses and when the outlook is poor, there will be less people selling houses.
Many believe that this real estate bubble will come to an end, and this is due to the fact that the housing values will continue to increase as the U.S. economy begins to recover from recession. However, it is possible that the bubble will never burst.
The real estate bubble has already burst before the current economic outlook. When the economy is in recovery, the house value of one area increases. When there is still economic growth, the house value goes down.
For many years now, we have been watching this real estate bubble and waiting for it to burst. In order to prevent the bubble from bursting and to keep your real estate portfolio strong, it is important to make sure that you take advantage of every possible opportunity to buy low and sell high.
