|
|
|
 
 
 
 
|
|
|
|
|
||
|
| ||||
| ||||
| ||||
| ||||
| ||||
|
|
|
Real estate boom, mortgage refinance craze in US can continue for many years though the risk is high – expect a fantastic blow off of a lifetime
When will the real estate bubble burst? It cannot be now because many people are scared and looking for it. The way market works is different. The market is like an elevator. It picks up people on its way up and then comes down fully loaded with every one in it.
How long can this bubble survive? It can go on for a long time. The bubble can grow real big. The only way a bubble can burst is through a trigger. If the US Federal Government and foreign central banks are determined to service the economy the way they have done it by making mortgage easy and affordable, the boom can continue and the bubble can keep becoming bigger. As a matter of fact the real estate and mortgage financing market can really accelerate now as “dumb money” becomes eager and crazy to get into the real estate and apply leverage.
But remember, the real estate and related mortgage financing market is running on a thin ice called pyramiding technique. The bust will come someday but do not start waiting for that. Real estate now should be treated as a fairly risky leveraged market just like futures market. The gain can be massive but when the real estate finally crashes, it will be a real blood bath.
The point that we are trying to make here is that you should be careful but not wait for the bubble to burst. The US budget deficit, social security and Medicare are all in trouble but they are not going to collapse tomorrow. You should own real estate but remember it is very high in price, will someday correct massively and you should understand the value of the property which may not be what it appraises today.
What will affect the housing and real estate market in general is the property tax. Property tax will go through the roof. And that may be the dreadful trigger, which can cause the bubble to burst.
It is difficult to find renters in investment properties. But the newly formed millions of “dumb money” real estate investment clubs are not waiting to put the properties on rent. They are paying the mortgage through borrowing against other properties with a hope that the real estate will go up steadily. As a matter of fact, the real estate market will up very nicely now till it bursts. The same people formed “stock investment clubs in 1998-99”. They lost massively in the stock market crash. These same “dumb money” is back in real estate now. Like stocks in 1998-2000, the real estate will accelerate upwards first; the bubble will burst and then finally it will fall without a parachute from 35,000 feet to the ground.
We expect a fantastic blow off in the real estate market in US for the next “period”. The only problem is that no one knows how long that “period” wills be – years, months or days. But till the bubble burst, the upper end of the blow off will be spectacular when home prices will quadruple every few months – yes that kind of acceleration in certain properties and locations!
US ELECTION ARTICLES
|
|
| Click here to get ad specs and place your ad or Click here to contact the advertisement department |
Send Letters to the Editor |
Add RSS headlines