If you own real estate or are looking at real estate then you better pay attention, because this could be the most important message you receive this year regarding real estate and your economical future.

The last five decades have seen explosive growth in the real estate industry and consequently many individuals believe that real estate is the most secure investment you can create. Well, that is no more true. Rapidly increasing real estate costs have caused the real estate industry to be at prices never before seen in history when altered for inflation! The increasing variety of individuals worried about the actual estate bubble means there are less available real estate customers. Fewer customers mean that costs are arriving down.

On May 4, 2006, Federal Reserve Board Governor Leslie Blies mentioned that “Housing has really sort of peaked”.

This follows on the heels of the new Fed Chairman Ben Bernanke saying that he was worried that the “softening” of the real estate industry would hurt the economy. And former Fed Chairman Mike Greenspan previously described the real estate industry as steamy. All of these top specialists agree that there is already a viable downturn in the marketplace, so clearly there is a need to know the purpose why behind this change.

3 of the top 9 reasons that the actual estate bubble will burst include:

1. Price is increasing – home foreclosures are up 72%!

2. New home buyers are cost out of the industry – the real estate industry is a chart and the base is crumbling

3. The mindset of the industry has modified so that now individuals are afraid of the bubble exploding – the mania over real estate is over!

The first purpose that the actual estate bubble is exploding is increasing attention rates.

Under Mike Greenspan, attention rates were at ancient lows from May 2003 to May 2004. These low attention allowed individuals to buy houses that were more costly then what they could normally afford but at the same per month cost, essentially creating “free money”. However, plenty of duration of low attention has ended as attention rates have been increasing and will keep increase further. Prices must increase to combat blowing up, partially due to great energy and food costs. Greater attention rates create buying more costly, thus driving existing ideals down.

Higher attention rates are also affecting individuals who purchased adaptable home mortgages (ARMs). Adjustable home mortgages have very low attention and low per month bills for the first two to three decades but afterwards the low per month attention disappears and the transaction per month advances considerably. Due to adaptable interest amount starts over, house home foreclosures for the 1st one fourth of 2006 are up 72% over the 1st one fourth of 2005.

The foreclosure situation will only intensify as attention rates keep increase and more adaptable home loan repayments are altered to an increased per month attention and transaction. Moody’s mentioned that 25% of all outstanding home mortgages are arriving up for per month attention starts over during 2006 and 2007. That is $2 k of U.S. home loan debt! When the expenses increase, it will be quite a hit to the bank account. A study done by one of the country’s biggest title providers concluded that 1.4 million people will face a transaction jump of 50% or more once the introductory transaction period is over.

The second purpose that the actual estate bubble is exploding is that new home buyers will able to buy houses due to price and attention rates. The real estate industry is basically a chart scheme and as long as the variety of customers is increasing everything is fine. As houses are purchased by first time individuals at the bottom of the chart, the new cash for that $100,000.00 house goes all the way up the chart to the seller and buyer of a $1,000,000.00 house as individuals sell one house and buy a more costly house. This double-edged blade of great real estate costs and attention rates has cost many new customers out of the industry, and now we are starting to feel the effects on the overall real estate industry. Revenue are reducing and selections of houses available for sale are increasing quickly. The latest report on the real estate industry showed new house sales fell 10.5% for Feb 2006. This is the biggest one-month drop in nine decades.

The third purpose that the actual estate bubble is exploding is that the mindset of the real estate industry has modified. For the last five decades the real estate industry has risen considerably and if you purchased real estate you more than likely made cash. This positive return for so many investors motivated the industry higher as more individuals saw this and decided to also invest in tangible estate before they ‘missed out’.

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