Whats This about a Housing Bubble?

In his recent testimony, Alan Greenspan warned against the possiblity that we have seen home prices plateau. The bursting of the "bubble" could cause a big hit to the U.S. economy. But, why should we worry?

Well, as we all know, house prices are up across the country...over 10% in the last year, including over 25% in some markets. Additionally, house prices have risen over 70% since 1994, more than double the increase of renting during that time period. Demand for houses is high, as interest rates have stayed low. This has created an investment market for houses.

Now, the average homeowner can use the equity in his/her home to finance the purchase of one or more additional houses. One statistic showed that 13% of houses are currently unoccupied, due to investors gobbling them up, hoping the prices will continue to skyrocket.

But can these prices last? Once the supply of houses exceeds demand, we could see a rapid drop in prices, as people look to sell their extra homes. Higher interest rates or falling prices could scare away potential buyers, creating a housing market crash.

Furthermore, those with Adjustable Rate Mortgages (ARMs) who figured they would only own the house for 3-4 years might now be stuck with either a high interest mortgage, or selling the home for a substantial loss.

Either way, the potential for bankrupt investors seems unnervingly real. With new laws making it harder for one to declare bankruptcy, we could become a nation with huge individual debt...and that would certainly hurt our economy.

Scott publishes and maintains Stock Market Plus, a financial blog with topics ranging from Investing to Debt Control. Visit him at http://www.stockmarketplus.com

---

Choosing Your REALTOR ®

With so many realtors competing for your business, how do... Read More

Realty Agents: Don?t Ask Don?t Tell?

Real estate stories radiate from the water cooler and cocktail... Read More

11 Steps Away From Buying a Home

There is no doubt that the market for houses has... Read More

Why You Should Rent To Live And Buy To Invest

Why you should Rent a place to live in and... Read More

Flat Fee MLS Listings - Is This The Future Of Real Estate

Realtors are all a buzz about this new form of... Read More

Purchasing International Real Estate

Interested in investing somewhere other than your back yard?Management companies... Read More

Sell Your California Home For Top Dollar

HOW TO SELL YOUR HOME FOR TOP DOLLAR1. Make your... Read More

Secrets of Making Money from Real Estate - Part 4

Analyzing and finding the right property deals:Firstly read my other... Read More

How Can Real Estate Investors Profit From The Internet?

The Internet is a powerful marketing tool, but just how... Read More

Log Homes - What is the Log-Home Lifestyle?

Typical log home company advertisements in popular log home magazines... Read More

Is It Wise to Take My Home Off the Market for the Holidays?

Let's say you've had your home on the market for... Read More

Purchasing Property With No Money Down: My Personal Experience

Have you ever seen those infomercials about buying houses with... Read More

Subdividing - But NOT Land!

Many people are familiar with the concept of sub-dividing a... Read More

Property Investing Secrets 5

Property Investing Secrets:How To Work With Agents And Get What... Read More

Kings Bay Georgia Real Estate - An Amusing Tale About a Real Estate Agent

This story is true and not meant to hurt anyone,... Read More

Buying Foreclosures - Knowing Why Helps You Buy

One big potential deal-killer in buying foreclosures is the homeowner.... Read More

How to Create Cash Flow Out of Thin Air!

Want to see a trick every real estate investor will... Read More

Boston Real Estate - Interest Rates and Inventory Must be Analyzed when Selling Your Boston Home

When selling your Boston home, it's good practice to be... Read More

Important Facts For Home Buyers

If you are considering buying a home or have spent... Read More

Commercial Income Property Financing: Part 1 of 3

Welcome to this first portion of a three-part series about... Read More

FSBO: For Sale By Owners Chapter One

She reached the phone on its second ring. "This is... Read More

Finding, Fixing, Financing, and Flipping - The Short Course

Most people get involved in Real Estate investing to make... Read More

Joint Ventures In Real Estate Development; So How Do They Work?

There are many reasons why you would consider joining with... Read More

Real Estate Investing ? The Job Escape

Real estate investing is pretty unusual in lots of ways.... Read More

Buying Country Acreage and Rural Properties, To Buy or Not To Buy

Almost anyone can become a rural property owner; if you... Read More

Look Past the Bottom Line for a Propertys Potential

It's unfortunate that many real estate investors tend to look... Read More

Real Estate Tax Incentives

Lower Your TaxesTax incentives for real estate investors can often... Read More

Transforming Doghouses into Dollhouses

Successful real estate investing depends largely on a correct assessment... Read More

New Home Construction - The American Dream or The American Nightmare?

Buying a new home is suppose to be the American... Read More

Four Reasons To Offer Seller Financing

An example of seller financing: Years ago I bought a... Read More

Should you Sell your Home yourself?

Should you sell your home yourself? Yes and no. Yes,... Read More

Boom or Bust

For those looking to invest in the real estate market?keep... Read More

How to Find the Sweet Spot in Real Estate Investing

Psssssssssst, Want to know a great way to make FAST... Read More