Cutting Edge Real Estate, Is the Bubble Ready To Burst?

Of course, this is the big question in real estate now. . .

Will the so-called real estate bubble burst like the dot-com bubble did a few years back?

There are some good arguments on both sides of the issue. Whatever happens in the next few years, it will affect millions of Americans, and therefore also millions of people worldwide. If the bubble does "burst" as some say, it is all but certain we could, or more like would, go into a recession. A deep one. Right now the real estate business has been a prime reason that the economy has been decent the last few years. It has been one of the few consistently bright areas of our economy.

First of all, to compare the real estate industry with the dot-com industry is unreasonable. It's comparing apples with oranges. The real estate industry has been and will always be a central part of the US economy. It will never disappear and there will always be a need and demand for it. Investing in real estate makes sense for the long term. On the other hand, the dot-com bubble was not based on anything more than speculation. Many businesses were trading on the stock market for unreal amounts of money and never made a dime in profit and ultimately never would.

So for me, some of this thinking is this: "Well, the stock market had the dot-com boom and then it collapsed, so now we have this real estate boom so surely it will collapse also." I just don't go along with that comparison. Again, these are totally different industries and markets. Heck, if we can pay $20,000, $50,000 and even up to and over $100,000 on automobiles, then spending $300,000, $1,000,000 and more on homes seems very reasonable. Property will always be there as long as the mortgage is paid and the taxes are paid, too. That brings us to a good argument for believing the real estate market will slow down and possibly have a downturn.

The reason there is a good argument for the belief that the real estate industry will have a major downturn is because some people, perhaps a good amount of people, won't be able to keep up with their mortgage payments if they start losing their jobs and the economy slows down. The rise in gas prices could have a major effect on the economy and if these homeowners start defaulting on their mortgages then this could turn the industry around.

Many home owners and speculative real estate investors are using what some would call risky home mortgages, the interest-only and no-income verification loans. These allow more people to buy more homes and are part of the reason the real estate industry has enjoyed such a boom the last several years. Creative financing started decades ago and has kept increasing more and more different ways for the home buyer and speculator to get what they want. This is a good thing overall in my opinion. However I can see the dangers of this trend also. I don't feel a burst is inevitable but it is certainly very possible. Perhaps more likely, unless a major event such as another war or terrorist attack, is a slow down and evening off of the growth of the real estate industry.

There are those on the side of the inevitable downturn philosophy, who are preparing for the worst. Just as some people can make money on the stock market even when it goes down, there are those who are preparing for a possible ? inevitable in their minds ? downturn in the real estate market.

Here is one such way to capitalize on a real estate bubble burst or at least a downturn: pre- foreclosure deals. There are some investment clubs that are based solely on waiting for this to happen and then buying into this market. People will be foreclosing in record numbers if this downturn comes. Perhaps it is more accurate to say when, because as history shows there are always downturns in the market; and with all the creative financing, no interest loans and no income verification loans the probability of a downturn is likely. However, this is different than a "burst."

So here is what can happen:

1. The market will keep going the way it has the last few years, which is up, up and up. Quickly is some areas. Not likely.

2. The market will slow down and level off soon. Very possible.

3. The market will have a slight downturn and many will lose their homes and many will benefit from this. Very possible.

4. The market will "burst" the "bubble" and there will be a major catastrophe in the industry. Possible, but not as likely as 2 and 3.

Whatever happens, there will be some who are ready for it.

Tim Phelan makes his living now online and has been involved in real estate as an investment for several years. Tim Phelan's Blog More Real Estate Info

---

Is An Old Home for You? ? The Pros

If you prefer a home that is unique and has... Read More

Homes For Sell By Owner ? FSBOs and Buyer Brokers

You're selling your home as a FSBO (for sale by... Read More

Saving for a Home

So you want to buy a home? This is a... Read More

Real Estate Website Marketing - 5 Steps to Crushing Your Competition and Doubling Your Business

Getting your real estate website more traffic is easy if... Read More

Buying a Vacation Home

You'd like to buy a vacation home, but you're not... Read More

Home Not Selling In Todays Hot Market? Tips and Ideas to Help You Sell

So, your selling your home. Prepare yourself both physically and... Read More

Commercial Income Property Financing: Part 1 of 3

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

10 Home Purchase Abroad Tips For Success

Are you seeking your little corner of sun drenched heaven... Read More

Odors Can Make or Break The Sale of Your Home

It's amazing how important the sense of smell is to... Read More

The Many Ways To Profit From O.P.P.s Multiple Cash Streams

In a previous article we introduced you to the concept... Read More

Minneapolis Warehouse Loft

Downtown Minneapolis is rich with true metropolitan charm. With the... Read More

5 Rock-Solid Real Estate Investment Strategies

Investing in real estate is more complex than simply buying... Read More

Making it affordable: Nine tips for first time home buyers

It seems that everyone loves a good real estate story.... Read More

How To Give Yourself A $20,000/Year Raise Without Asking Your Boss

Why without asking your boss? Two reasons, one, he or... Read More

How to Build a Real Estate Investing Power Team

As you continue to read about real estate investing, you... Read More

Buying a Newly-Built Home? Ten Benefits of Using a Real Estate Professional

It might not seem necessary to involve a real estate... Read More

Top 7 Reasons Why FSBOs Fail To Sell Their Home On Their Own!

In the United States, less than 10% of all For... Read More

Miami Property Booming for Foreign Investors

Miami tourism is growing and so is the Miami property... Read More

Buying Property in Portugal

Portugal has long been a popular choice for people, particularly... Read More

Credit Help: Buying Real Estate -- Not the Same as Buying Cars

Credit for Buying Real Estate is Different than Credit for... Read More

10 Important Tips to Successful Real Estate Investing

When it comes to investing, everybody has certain goals and... Read More

Panama is Hot - A World Class Retirement Haven Thats Ripe For Profitable Real Estate Investment

If you've followed any of the major survey agencies around... Read More

What To Expect From Your House Appraisal

Having your house appraised can be a scary step in... Read More

A Real Estate Investing Primer

There are a great many books and web sites devoted... Read More

Real Estate Web Design - 3 Items You Must Include on Your Site

Real estate web design requires you to do things a... Read More

Are Condo Hotels What the Orlando Real Estate Investor Has Been Looking For?

Earlier this year the Hawthorn suites in Lake Buena Vista... Read More

Pricing Your Property

A house properly priced is half sold. But there are... Read More

How Real Estate Investors Use Mortgage Note To Purchase Properties

Many of you may not be aware of the various... Read More

Taxes When You Sell Your Home

What's the difference between death and taxes?Death doesn't change every... Read More

Real Estate Investing In Mexico

Mexico is CHEAP! But its getting more expensive. As property... Read More

How to Find the Sweet Spot in Real Estate Investing

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

Timing Is Everything When It Comes To Buying Homes

The old adage that "timing is everything" especially applies to... Read More

For Sale By Owner: The Inside Scoop On Selling Your Own Home

If you're thinking about selling your home perhaps the 'for... Read More