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Real Estate Information |
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The Bubble Effect
Turn on the TV at almost any time day or night and you will find news and talk shows informing us that there is a Real Estate bubble. What is a "bubble" and how do they know? The simple principle of what goes up must come down is being applied in general thought now and many in the public are starting to buy it. Let's sit down, think logically and see if there is indeed a bubble or if there is room to grow. Challenge 1: The "Investors" are driving the market upward and when they leave, everything will crash. This of course is completely false. Let's start by looking at home loans 5-10 years ago. A person with a decent credit score would have to pass a bunch of hurdles and put down 5-10%. On a $200,000 homes, this meant coming up with $10,000 - $20,000. The Internet was around, but still a mystery to most. Fast forward to today. The Internet is widely used by everyone from the grade school child to the senior citizen. The flow of information is simply amazing and because of this people are being educated quickly. People are no longer limited to just those they personally know. Loans are now easier to get. Someone with decent credit can walk into a home with zero down now. How many people do you know that pay rent on time? How many of those people have $10,000 or $20,000 or more in their account? Thanks to the recent relaxation of loan qualifications, these people were locked out of owning a home as recent as 5-10 years ago can now walk into a home and enjoy the American dream. You see, it is not solely investors driving the market (many are regular people), but the millions and millions of Americans who can now walk into a home with little to nothing down. Challenge 2: Don't forget about the Tech market crash. You can't go far without hearing some so-called expert performing a "remember the Alamo" yell about the tech stock crash years ago. Why is this not relevant? The first reason would be that you can live in a home and everyone needs somewhere to live. A stock is just a piece of paper that you can put in the shredder or in a drawer. If it goes to zero you have nothing. What if a home went to zero? You would still have it to live in and enjoy. The tech market crashed because you had brick and mortar CEO's and personnel trying to run Internet based companies. You had people with no real knowledge of how to make money on the Internet coming up with all sorts of ridiculous ideas. It was destroyed because the majority of the people running the show were not properly qualified and the people investing did not care. To compare this crash with Real Estate is like comparing the Enron fiasco to why you burnt the tri-tip on your BBQ. Challenge 3: Interest rates will go up and everything will crash. Will it now? Rates have not jumped up overnight nor will there. Think about this. Let's say you are looking at a home that will require you carry a mortgage of $200,000. Right now you can get it at 6%, but you wait and tomorrow when you wake up, rates went up and it will now cost you 8% (which is a major jump). The difference? $250 per month. If you bought a home just $20,000 less, your mortgage difference would drop to only $100 per month more. This was a huge jump, but would $250 per month stop everyone from buying? Not even close. It would cause some to lower the amount of house they bought slightly. For most, they still buy. There are more loans for people with bad credit and low incomes than ever before. These are not some wildly high percentage loans either. The ease of loan approval has created millions of buyers all over the country. I would submit to you that if homes in an area come down and correct a little, it is not because of a "bubble", rather because the homes were overpriced in that area to begin with and/or the area's value decreased. You can find out more about Real Estate by visiting my website, Jake Truman.com. Copyright 2005 JakeTruman.com Jake Truman is a Real Estate & Stock investor and Credit informer. Website: Real Estate. He has published a book on Credit Help, which is available at his website.
MORE RESOURCES: Finance Guru Dave Ramsey Built This Lavish Tennessee Estate—Now It's Back on the Market for $15 Million Realtor.com CoStar sues Zillow over photos, claims ‘systematic infringement’ Real Estate News by RealEstateNews.com Blackstone Executive Wesley LePatner Died in NYC Shooting Business Insider Slain Blackstone executive was a real estate powerhouse Crain's New York Business Real estate: Home prices climb in Martin, Indian River counties; fall in St. Lucie County Treasure Coast News Real Estate Investment Trusts Score Legislative Wins Forvis Mazars US Seattle-area real estate startup Flyhomes raises $15M as it pivots to 'Buy Before You Sell' model GeekWire After 30 years, Linda A. Gary Real Estate moves office from prominent Worth Avenue corner Palm Beach Daily News Brokerage Growth Dominated by New Models Mike DelPrete - Real Estate Tech Strategist Central Pa. real estate company expands to Georgia Central Penn Business Journal New bill aims for stricter penalties against real estate brokers who violate housing discrimination laws The Bay State Banner Fed resists pressure to lower rates at July meeting Real Estate News by RealEstateNews.com The market is changing — and the industry's old rules are outdated Real Estate News by RealEstateNews.com SRS Real Estate Partners Arranges $7.5 Million Ground Lease Sale of Wawa in Jackson Township, NJ citybiz Real estate: Condo prices rise in Indian River County; fall in Martin, St. Lucie counties Treasure Coast News Big Moves in Tucson: KMS Realty Merges with United Real Estate Specialists to Expand Services and Reach Morningstar Atlanta real estate mogul, former Hawks owner Tom Cousins dies at 93 Atlanta News First AI that replaces ‘human hires’; another brokerage deal for Canva Real Estate News by RealEstateNews.com I-78/I-81 Corridor commercial real estate activity picking up Lehigh Valley Business Mortgage Rates Today: The States Offering Lowest Rates – July 30, 2025 Norada Real Estate Investments CREFC Sentiment Index Surges in Q2 2025, Signaling Rebound in CRE Market Optimism Boston Real Estate Times Jersey County property sales recorded July 21-25 Alton Telegraph NAR Pending Home Sales Report Shows 0.8% Decrease in June National Association of REALTORS® Aperture Global Real Estate Announces Partnership With Rechat to Power the Next Era of Luxury Real Estate Business Wire 10 metro Detroit suburbs where homebuyers can still find a deal Detroit Free Press Troy Furbay has been appointed Managing Director, Hospitality at Crescent Real Estate LLC Hospitality Net Mortgage Rates Predictions for the Next 90 Days: August to October 2025 Norada Real Estate Investments Real estate giant Blackstone caught in crossfire after top executive Wesley LePatner killed in NYC shootin The Economic Times Richland County property transfers recorded July 21-24 Mansfield News Journal Delaware June home sales stronger than national numbers; median sold price at record high The News Journal US industrial real estate investor Terreno sells $82m portfolio IPE Real Assets Pacific Development and PGIM Real Estate Land $97 Million Construction Loan for Landmark Mixed-Housing Project in Santa Rosa Yahoo Finance ‘Walking beside him’: Daughter continues stepfather’s real estate dream Mountain Home Observer Top residential real estate sales for July 14-18 in Longboat, Lido, St. Armands, Bird Key Your Observer Judge sides with LGBTQ+ Alliance in battle with ex-CEO Real Estate News by RealEstateNews.com Double digit price increases for Putnam real estate Mid Hudson News Remote Bookkeeping Services from IBN Technologies improves U.S. Real Estate Firms Financial Oversight Barchart.com News | Bank of Canada decision to hold overnight rate steady keeps real estate industry waiting CoStar Real Estate Expert Jody Wainio of Buyers Choice Realty Shares Advice on Mortgage Pre-Approvals in HelloNation GlobeNewswire Professional Services Automation Simplifies Real Estate Workflows with Help from IBN Technologies openPR.com The real estate market: 5 key themes to watch this week Real Estate News by RealEstateNews.com Universities leverage their real estate amid financial shortfalls and demographic cliff The Business Journals Pacific Development and PGIM Real Estate Land $97 Million Construction Loan for Landmark Mixed-Housing Project in Santa Rosa Business Wire News | UK commercial real estate investment slips slightly to £10 billion in second quarter - CoStar Christie’s Debuts Crypto Real Estate Division The New York Times A Market in Motion: Rethinking Real Estate Horizons in Turkey Modern Diplomacy Real Estate Attorney Michael Fralin Urges Professionals to Reclaim Focus and Rethink Career Growth openPR.com |
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