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Boom or Bust
For those looking to invest in the real estate market?keep your eyes on the headlines. According to the Federal Deposit Insurance Corp. (FDIC), the number of areas across the U.S. with real estate booms shot to 55, increasing by nearly two-thirds last year. The FDIC warns, "these booms may be followed by busts". "Boom" areas are defined as having inflation-adjusted prices at the end of 2004 that were up 30% or more in three years. Of the 362 major metropolitan cities included in this study, over 15% were boom areas. This data, analyzed by the Office of Federal Housing Enterprise Oversight, more than doubles the peak of the 1980's booms and is the highest ratio of boom markets in 30 years. As for "boom or bust", busts are rare. Only 17% of U.S. housing booms from 1978-1998 ended in busts, which are defined as a 15% or more drop in home prices over a five-year period. What is making the market soar? Aside from inflation, the mortgage industry has to be considered first. Adjustable rate and interest only mortgages are growing in numbers and subprime loans now account for 10% of all mortgage loans. With interest rates lower than they've been in years, borrowers can afford to finance an amount greater than the standard 80% loan to value. The percentage of loans exceeding 80% of the purchase price has grown to over 30%. If a borrower has an adjustable rate mortgage and the interest rates rise, their payments increase. If the market values drop, or bust and they have 90% or 95% loan to value, they owe more on the home than it is worth. But these are all "What ifs??". In the markets with the highest number of "boom" cities, California with 21 cities has a high increase rate of 58% and Florida with 11 cities has a high increase rate of 54%. These two states alone account for 60% of the boom areas! With these numbers, would you purchase an investment property in Florida or California and flip it in three years for a possible return upwards of 50%? Of course. A relatively sound investment. How much longer can the market withstand these price increases before it busts? Even history shows a period of time when the market stalls so that inflation can catch up. If you want to invest in real estate, carefully examine the history of the market you are purchasing in! If it has been booming like Florida and California, be careful how long you hold on to the property. If you notice the market is starting to drop, sell. Hold on too long, it may bust! Jason M. Rigler
MORE RESOURCES: Real estate experts share a message for home buyers as they predict rising home prices through 2025 Fox Business The Folly of China's Real-Estate Boom Was Easy to See, but No One Wanted to Stop It The Wall Street Journal Agencies' headquarters in DC remained 'nearly empty' in 2023, real-estate board finds Federal News Network reAlpha Tech Corp. Launches Claire, Real Estate's First AI-powered, Zero-Commission Smart Buyer's Agent Business Wire Blackstone's Beleaguered Real-Estate Fund Stems Exodus The Wall Street Journal Real Estate Transactions: April 26, 2024 The Recorder The East End Real Estate Market Report: 1Q 2024 Corcoran Inhabit real estate market and insurance Sacramento Appraisal Blog Home in Silver Hills North an oasis in Prattville | REAL ESTATE Montgomery Advertiser Rockford is America’s top real estate market: report MyStateline.com @properties Christie's International Real Estate Taps Industry Leader to Expand in Fort Worth - CandysDirt.com CandysDirt.com Public records: Muskingum County, Ohio, real estate transfers Zanesville Times Recorder New national real estate scholarship goes to local youth ECB Publishing The Top 3 Real Estate Stocks to Buy in April 2024 InvestorPlace Anywhere Real Estate Inc. (HOUS) Reports Q1 2024 Financial Results Amidst Market Challenges Yahoo Finance Reversing the Real-Estate Doom Loop Is Possible. Just Look at Detroit. The Wall Street Journal Homes for Sale in New York and Connecticut The New York Times Shelter Island Reporter real estate transfers, April 25, 2024 - Shelter Island Reporter Shelter Island Reporter New Mexico SIC commits $250m to real estate funds IPE Real Assets Inked: Recent LI real estate deals Long Island Business News Spokane-based Haven Real Estate Group acquired by Epique Realty Spokane Journal of Business Top Transfers: 65,000 sq. ft. Dublin property sells for $7.85 million The Columbus Dispatch Top residential real estate sales for April 8-12 in Sarasota, Siesta Key, Palmer Ranch, Osprey, Nokomis Your Observer Judge approves multimillion-dollar Realtor settlement, upending the way Americans buy and sell homes WTVD-TV Inside Savannah Homes $3.1M Tybee home with panoramic ocean view Savannah Morning News Real estate transfers GoDanRiver.com Rockford Is Now America's Top Housing Market After an Improbable Turnaround The Wall Street Journal Philly's luxury penthouses; Linden Hill Estate in Gladwyne up for auction The Philadelphia Inquirer First-ever rural-focused Real Estate Development Boot Camp aimed at emerging housing developers Second Wave Michigan ANYWHERE REAL ESTATE INC. REPORTS FIRST QUARTER 2024 FINANCIAL RESULTS Longview News-Journal Anywhere Real Estate Inc. 2024 Q1 - Results - Earnings Call Presentation (NYSE:HOUS) - Seeking Alpha As RREAF CEO Kip Sowden weighs future, son Graham waits his turn The Dallas Morning News La Rosa Acquires Tenth Real Estate Brokerage Franchisee with Revenue of $4.7 Million and ... The Bakersfield Californian Kevin Owens joins Scottsdale-based Lessen real estate company | Scottsdale Independent Daily Independent REAL ESTATE | Open House event April 25, 2024, at Love Hope Faith Home in West Bend, Wi | By Charmaine Brea washingtoncountyinsider.com Bedford board votes to keep real estate tax rate level Lynchburg News and Advance Pigford marks 50 years as licensed real estate agent Meridian Star Real Estate Development Firm Seeking Community Input For Honey Creek Road Property in Rockdale County News-Daily.com Collierville shopping center sold to Atlanta-based real estate firm - Memphis Business Journal The Business Journals CoStar Group acquires Matterport for digitalizing real estate GIM International Pro boxer Caleb Truax retiring to become Twin Cities real estate agent - Minneapolis / St. Paul Business Journal The Business Journals Quebec Real Estate Investor Luc Poirier Looks to South Shore Brossard for Future Growth CoStar Group Real Estate Development Firm Seeking Community Input For Honey Creek Road Property in Rockdale County Rockdale Newton Citizen Manhattan Real Estate Update: "Embrace the Boredom" westsiderag.com Who's Who in Residential Real Estate 2024: Berkshire Hathaway agents - Pittsburgh Business Times The Business Journals 10 most expensive homes sold in Monroe County, April 15-21 lehighvalleylive.com Massachusetts housing crisis: Greater Boston Real Estate Board campaign slams transfer fees Boston Herald 10 most expensive homes sold in Lehigh County, April 15-21 lehighvalleylive.com Positive week for Mivne Real Estate (K.D) Ltd (TLV:MVNE) institutional investors who lost 6.9% over the past year Simply Wall St The Highest Paid Execs in Real Estate Mike DelPrete California, United States Luxury Real Estate Home California Listings Real Estate Property Transfers in Franklin for April 1, 2024 Williamson Source 10 most expensive homes sold in Berks County, April 15-21 lehighvalleylive.com What changes to real estate industry commissions could mean for you | Dollars & Sense ABC10.com KXTV Invest DSM selects real estate firm to manage mixed-use building in Highland Park Local 5 - weareiowa.com 10 most expensive homes sold in Northampton County, April 15-21 lehighvalleylive.com Real Estate Sales Include Two Falconer Commercial Properties Jamestown Post Journal 10 most expensive homes sold in Bucks County, April 15-21 lehighvalleylive.com Is The Housing Market Going To Crash? Bankrate.com Banks Believe They Are Well-Prepared for Commercial Real Estate Fallout The Wall Street Journal Big changes coming to commissions in July ABC10.com KXTV |
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