The future of real estate – lower prices higher supply and demand
Peter Oberois
May 12, 2007

It is interesting to watch those who were super bullish on real estate, and have come super bearish again. We predicted three years ago that the real estate market will eventually blow off and collapse like a balloon without hot air.

At that time people did not like to hear anything against their warned super escalating home prices. We warned them again, and again, not to borrow against their the homes. The paper money disappeared as we predicted leaving millions helpless in the middle of the enormous debt they owe to loan sharks.

Now that real estate prices have collapsed, the million dollar question is what will happen next in the prices of real estate?

We used nonlinear time series and stochastic processes to understand the most probable outcome in real estate market in the next twenty years.

The supply of new homes will be abundant as developers move into remote land parcels trying to build brand new communities centered around job growth initiatives from the Government and the private industries.

The demand for new homes will also rise as people start treating new homes as new cars. The supply will be abundant and demand will be strong.

What will be different is that people will find the prices way lower because of lack of cheap money from banks as loans. The banks will go belly up. They will be scared to loan money unless they are convinced that the borrower can repay. Old home prices will no longer appreciate. Like cars the prices will actually fall as new mortgage underwriting laws take hold.

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