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Is Housing Market Booming Toward A Bust
ow long can prices rise Which leads people who know
before no one can afford to finances and the market to
buy? In a nutshell, that is question how long it can last. A
the basic question that is major part of that answer is in
niggling at the back of our the question that opened this
collective subconscious when we article. Prices will continue to
talk about the real estate rise until they reach the point
bubble. where most people can no longer
afford to buy.
Real estate is appreciating at
staggering rates - as much as 19% Another part of the answer is in
in some counties in Florida the fact that the real estate
according to state officials. bubble is extremely localized -
Meanwhile, on the financing and it's localized in some of the
scene, interest rates are low - larger media centers around the
and staying there. Low interest country. Massachusetts, New York,
rates mean lower monthly mortgage Florida, California - those
payments - which means that many states are seeing unprecedented
people are able to borrow MORE rises in housing and real estate
and afford larger mortgages and prices. According to national
more expensive houses. Couple the reports, the median price for a
astronomical increase in real home in the United States rose
estate value with the continuing 14.7% over the last twelve
trend of low interest rates, and months. That percentage is
you have a sizzling hot real deceiving though. Take a look at
estate market that just keeps some more local figures to get a
getting hotter as investors jump clearer look at the reality.
on board to get their piece of
the real estate pie. If you live in Nevada, the median
price of a home rose 31.2
percent. In California, home quote a Florida economist, "The
appreciation rose up 25.4. In people who think it's a big
Hawaii, the figure was 24.4 bubble see a big crash. We just
percent, in Washington, D.C., see deceleration. You don't have
22.2 percent and in Florida up to worry about house prices going
21.4 percent. Most of the rest of down."
the country is NOT seeing those
sorts of astronomical increases The bad news may be for those who
in value, though. If you're see real estate as a
buying in Mississippi, for get-rich-quick proposition. One
instance, home prices have of the most popular investment
appreciated at a more reasonable 'schemes' of recent years has
4.9%. Even in the Northeast, been 'flipping houses' - the
where a two bedroom home in practice of buying a house, then
Boston can easily sell for reselling it within a six to
$400,000, if you take a short twelve months for a profit. When
drive outside the city to the real estate prices are rising at
western half of the state, you'll 20 - 30% per year, there's a
still find 3 and 4 bedroom homes great deal of money to be made
selling in the low $100's - and that way. A down payment of
less. $10,000 can effectively double or
triple your money in less than a
What's it all mean? Among other year. According to conservative
things, it means that the dangers estimates, though, real estate
of a real estate 'crash' are as prices need to rise by at least
localized as the effects of the 15% a year to even cover your
real estate bubble. It means that closing costs if you sell in less
the foreseen losses are more than a year.
likely to be smaller profits
rather than actual losses. To Does that mean that you'll LOSE
money on your purchase if real the 'classic' real estate
estate prices stabilize and drop investor, or the average home
back to their more usual 5 - 8% buyer who is looking for an
per year rise? Of course not! It affordable house for himself and
simply means that real estate his family. Prices will stabilize
goes back to being what it has and even drop a little - but the
always been - a good, solid, bottom won't fall out of the real
long-term investment. It means estate market. The typical real
that speculators looking to make estate owner/investor will still
a quick buck will have to end up with a house and land
re-adjust their expectations - that's worth more than what he
and either find a different paid for it. And all the
'product' - or hold their naysayers and panic mongers can
properties longer before selling. stop predicting the resounding
crash of the real estate bubble
falling to earth.
Either option is good news for
About the Author:
Is this a good time to buy a house? Andrew is the owner of "Buy and Sell House Fast Guide", a website that provides informational guide on real estate investment, home buying and selling tips, mortgage loans, foreclosures and more. Is this a right time to buy a house? Find out the answer at his website: http://www.buy-and-sell-house-fast.com/
Source: www.isnare.com
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