Is The Real Estate Market In A Bubble That’s Ready To Pop?
Especially after the last real estate bubble popped, everyone wants to know “are we in another real estate bubble that’s ready to pop?”
As a real estate investor/agent/broker, I continually get asked, “is the real estate market in a bubble that’s ready to pop?” Now, before I share my thoughts on this topic, it is important to remember my opinion is really geo-specific to the greater Los Angeles area. And just to put it into perspective. California is its own economy by itself, and Los Angeles is a micro-economy inside of California.
In Los Angeles, we are seeing signs of the real estate market cooling off (and or) the real estate market plateauing. And even though that sounds bad, the market cooling off a bit isn’t as bad as it sounds because all it really means is the real estate market has been moving up, up, up, and now it is leveling off.
Because the real estate market seems to have leveled off, it is only natural people are worried the real estate market is about to crash and burn once again. But here’s the deal (and or) here’s my opinion.
When the real estate market crashed in 2008, we now know defaulted loans caused the crash. We also know people qualifying for the loans were not qualified to pay the loans back and the banks were turning a blind eye.
Fast forward to today. The loan systems in place, before you get a loan, you have to prove you have the ability to pay the loan back which in turn is creating a lot more stability for the real estate market. Recently, the unemployment news that just came out wasn’t the best, but that is actually is good news for the real estate market because that means interest rates will remain low. And with low-interest rates in place, the real estate market should remain buoyant as low-interest rates are a key factor in supporting a healthy economy.
In short. In a very desirable area such a Los Angeles. And because the Los Angeles real estate market is desirable – the real estate market is somewhat isolated and protected from the bubble bursting. And with that said – I’m going on record.
In the Los Angels area – the real estate market is safe from the bubble popping. In fact. I feel we have at least another 12 months to 24 months of this plateau. After that as long as we continue to have lower interest rates in place, the Los Angeles market should keep sauntering along.
Buying a home with Jon Kolsky
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