The Three Top Reasons Why the Real Estate Bubble is Busting

Do you own a property or are you planning to invest one? If you do better pay attention to this because this could be the most important message you’ll receive regarding your real estate and financial future.
For the last five years there has been a continuous growth in the property market. As a result, many have come to believe that it is the safest investment one can ever make. However, that was for the last five years, not at present. The rapid increase of property prices when adjusted for inflation has caused the market to be at prices never before faced in the past. With the growing population concerned about the real estate bubble means there are already fewer available real estate buyers. And that also means prices are going down.
On May 4, 2006, it was stated by Governor Susan Blies of Federal Reserve Board that “Housing has come to its peak.” Also the New Fed Chairman Ben Bernanke said that he was concerned that the “softening” of the real estate market would greatly affect the economy. As former Fed Chairman Alan Greenspan described the property market as frothy. These financial experts both agreed that there is already a reduction in the economic status of the market, and clearly we have to know the reasons behind.
The top reasons why the real estate bubble will burst:
1. The interest rates are increasing with foreclosure up to 72 %!
Unlike before, higher interest rates are making buyers own a more expensive house and that is dragging the home values down. With these high interest rates, it affects investors who bought adjustable Who Appoints The Real Estate Commissioner mortgage. Adjustable mortgages have very low monthly payment and interest rates for the first 2-3 years, but later it will jump up dramatically. This will also worsen the foreclosure situation.
2. The first time buyers are priced-out of the market – the real estates’ pyramid base is already crumbling down.
As homes are bought by first time buyers (at the bottom of the pyramid), the new money for that $100,000.00 home goes all the way up the pyramid to the seller and buyer of a $1,000,000.00 home. This double-edged sword has priced many new buyers out of the market, and now we are starting to feel the effects on the overall property market. Sales are slowing while inventories of homes available for sale are rising so fast.
3. The psychology of the market has already changed that’s why people are afraid of the bubble bursting.
This positive return of many investors stimulated the market higher and made When Should You Sell Your First House more people decide to also invest in property before they ‘missed out’.
The bubble continues to rise as long as there is someone to fool. When mania passes, the extreme inventory that was built during the hot spot causes prices to drop fast. Because of the changing mindset, investors and speculators are getting worried to be left holding real estate; losing money.
With the changing in the mindset related to the property market, investors and speculators are getting scared that they will be left holding real estate that will lose money. And now they are buying less real estate and simultaneously selling their investment properties too. This results to huge numbers of houses for sale and increasing construction records in the market, which also aggravates the problem thus driving all the real estate values down. Surely, the aftershock of bubbling bursting will be enormous and will greatly affect the global economy.

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