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Is The Real Estate Market In A Bubble That’s Ready To Pop?

By
Real Estate Broker/Owner with Kolsky Realty & Management 01311273

 

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

 

 

 

Comments(9)

Anna "Banana" Kruchten
HomeSmart Real Estate - Phoenix, AZ
602-380-4886

Jon I agree your market is going strong with no let up in site for awhile. Our market is a mixed bag, some segments have slowed just a bit and prices have gone down a bit as well.

Sep 29, 2016 06:54 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

So much of the housing market these past several years has been bolstered by low interest rates.  Values in my estimation, for most of the country, have been in recovery mode from teh 2008 meltdown.  However, any significant interest rates hikes, are likely to cool things substantially!

Sep 29, 2016 12:11 PM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

I forget to mention that I like that graphic you have accompanying this post.

CONGRATULATIONS on having this blog FEATURED in the Old Farts Club group!    

Sep 29, 2016 12:13 PM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good evening Jon. Think you have this one properly diagnosed! Enjoy your evening

Sep 29, 2016 12:50 PM
Jim Crawford
Long & Foster - Fredericksburg, VA
Jim Crawford Broker Associate Fredericksburg VA

Jon Kolsky thank you for taking the time to share this.  This is perfect information for buyers and sellers alike that are trying to make informed decisions!

Sep 29, 2016 11:00 PM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
CEO of Vision Drive Realty - Coastal San Diego

Great post, I did one similar back in August to bring some perspective. Wow you were lucky your market made it to 2008 before the crash, San Diego nosed dived in late 2006 and by 2007 I was learning short sales for survival. I have to agree, there's no real estate bubble, there's a plateau in our market. A bubble suggests inflated prices with too much inventory. Not the case in San Diego. We have an inventory shortage and appraisers are being brutal on values here. It's more of a natural cycle than a bubble.

Sep 29, 2016 11:53 PM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Anna Banana Kruchten ~ it is important to remember that markets vary by state and locality. The Los Angeles market should keep sauntering along without the bubble popping

Myrl Jeffcoat ~ the feds did a great job lowering interest rates when the bubble popped, and they have done even a better job keeping them low. And even if/when the feds decide to hike rates up a bit, as long as they are moderate the real estate market shouldn't waver too much on way or the other.. And thanks for the feature in OFC "I love it." 

Sep 30, 2016 05:07 AM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Wayne Martin ~ thank you, I appreciate the vote of confidence! Although this is my professional opinion, this is just my take on the current situation.

Jim Crawford ~ thank you, we do need to help sellers and buyers along. I consistently get asked about the market, and I always do my best to break it down as best I can. 

Sep 30, 2016 05:14 AM
Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Thomas J. Nelson, Realtor ~ the market started to tank in 2006 but we didn't feel the real force of the bubble popping until 2008. Great break-down of the current situation in San Diego, it looks like LA and SD mirror each other.

Sep 30, 2016 05:18 AM