If you turn on the TV, listen to the radio, or even surf the internet, you'll notice that there is a lot of people talking about the "Real Estate Bubble", and asking the question, "when is it going to burst?" They (these so-called experts) have been saying for years that the real estate market can't continue this type of growth. These "experts" remind me of chicken little, with all of their prosphesy of doom and gloom, and the "sky is falling" syndrome. The truth is there has never been a real estate bubble in the past, or presently, and there will certainly never be one in the future. Talk about there being a "real estate bubble" is the stuff that urban legends are made of.
Here's the readers digest version of what it all means. The real estate market is really, a "wave". It's cyclical, and we are riding on a big wave right now. Real Estate is just like Investing in the stock market, There are good years when values rise and there are years that are better, when values rise even higher. That's it, in a nutshell. Real estate has gone up and down throughout history, and generally speaking, it is fairly stable. When you look at a graph of real estate values, you would be able to see a clear pattern of increasing values. Now some years would have higher peaks than others, and all in all, it is a gradual building slope from left to right. And it looks just like a wave.
In addition, there are more up cycles, than down cycles. So the recent growth we've had will be followed by ones of downturn. The only difference is that it may not be as much of an increase, in other words the increase will be slower. The bottom line is, it will still be growth. This is why there will always be growth. Real Estate is a basic need. People need a roof over their heads. You can rest assured that people will be renting, buying, leasing, and selling homes. And it doesn't matter if the market is low or high or if the interest rates are up or down. Real Estate is a sure thing!
Remember Real Estate cycles tend to be regionally based. Real Estate is always driven by the economic principles of supply and demand. Some areas of the country, like Seattle, are going gangbusters, and real estate values are going sky high, and other areas like parts of the northeast are not increasing by the same percentage. However almost all areas are going up in value. Historically, property values increase in a strong job market. Other factors to think about include; program funding, interest rates, population growth, climate, and user-friendly state and local governments, including school system changes. These are critical points to consider when investing in real estate, either as a landlord or for personal use.
The key to successful real estate investing is to understand what drives the market. Stay on top of what is going on in your market place. Research the internet, read articles, get involved with your community. One other key to staying at the top of your game is to get a mentor or coach to help you succeed in your real estate investing career. If coaching is good enough for sports figures like Tiger Woods, why not you?
To sum it up, Real Estate bubbles don't exist, but there is a real estate wave. As any surfer knows, if you want to ride the waves, you need to get in the water. Watching the action can be fun, but will it put any money in your pocket? Invest with the intention of providing a service for others, and you can become rich investing in Real Estate.
Roseanne Nepht is founder of Real Estate XL - an excellent resource site dedicated to information on real estate.
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