Bursting the Upcoming Real Estate Bubble Theory

Most of what has been in the news recently regarding real estate is that a crash is coming or that we are in a bubble that could burst at any moment. What is a real estate bubble? A real estate bubble, or sometimes referred to as a property bubble, is a type of economic bubble that can happen locally or on a global scale. The real estate boom typically happens after a land boom, which is an extremely rapid increase in the market price of real estate. The prices keep increasing until they reach unsustainable levels and then decline. The effects of the bubble can be drastic, and because of the 2007-2008 financial crisis caused mainly by the real estate bubble, has many interested buyers scared to invest right now.

Is Now the Time to Buy or Sit on the Sidelines?

Ralph DiBugnara of Home Qualified does not believe we are looking at a crash, but more of a shift in the market. What is different now compared to the housing crisis from the mid 2000’s is that was a market that became over built, and when financing dried up, there was no one to buy those properties. In this market the prices have been driven up by under supply from a lack of inventory.

What we have seen over the last quarter in major cities is an increase in inventory and a stabilization of prices. Historically this is a good thermometer of what will happen across the smaller real estate markets soon. Buying a home is still a great Long-Term Investment. Real Estate will appreciate over time without the increase in payment from inflation that rent has.

Have you been convinced now is the time to buy? Check out our video on preparing your finances so you can invest in real estate!