IS THERE A REAL ESTATE HOUSING BUBBLE COMING?
I have to agree somewhat on this one. The investors are picking up homes in record numbers. Homes that were likely bought in the boom by bueyrs that never should have owned homes in the first place, and maybe should never own one again. Have you looked at some of the foreclosures on the market, do you think that the condition of them is due to hardship...I hardly think so. Some yes, most no. I hope lessons have been learned from the last bubble, but I do not think so. If the investors can get these homes bck to livable condition and hold on to them for while and then sell and make a profit, why not. It is better than having them sit there in the condition they are in now. We would all love to see homeownership mean something again, but in this "no deposit no return" world, will it happen? I sure am hopeful.
I keep reading about how this real estate frenzy is going to create the housing bubble similar to the 2004-2007 one. These are the people who have not experienced or read the history of real estate bubbles. Is there a real estate bubble coming? Yes but it years fron now. There are a number of reasons why I don't think there is a real estate bubble in the near future.
First our real esate values haven't risen to 2007 values. On average real estate values lost 30-35% off there 2007 highs. In some areas values dropped 70%. This has been true since that 1970's. So 15% price increase over the last year leaves a lot more room before we reach the previous highs.
Easy money no longer exists. You actually have to be qualified in order to get a mortgage. We had liar loans in the 90's and the 00's. The was no income or employment verification's needed. If you fogged up a mirror you qualified. People had $2500 monthly mortgage payments and no income to pay them.
Supply and demand issues. We have have lots of demand and not a lot of inventory. Builders are gearing up and will have new homes ready for purchase next year. If you follow Barbara Todaro's blogs you know how the Queen of Franklin is selling new homes with just dirt to look at.
This is the first recovering housing market where the investors out number the comsumers in some areas. If they don't out number them they are out spending them. They have tens of millions of dollars to buy distressed housing. They are taking a lot of housing off line. There model is to rehab them and then rent them out. Cash flow is not that important. They are holding them for 3-5 years. They are looking to double or triple their original investment.
So there is no bubble coming in the real estate inventory for another 3-4 years. Then the cycle begins again.
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