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The Current Happenings of the Real Estate Market

If you must invest in real estate properties or already own some, you have to pay close attention with what are the current happenings in the said industry. Experts in real estate claim that the real estate bubble is bursting. That being said, you have to be mindful in monitoring your investments and looking at what financial future lies ahead of you in such a chosen venture.

In the past five years, there was an extensive growth of the real estate market. This has led most people to believe that the real estate industry is one of the safest investments they can be in. Today, this is no longer the case. With real estate prices increasing, it seems that the real estate market has never experienced such prices as adjusted because of inflation. Because of the growing number of people who are more concerned about the real estate bubble, there are now less real estate buyers. With fewer real estate buyers, expect the prices of properties to also go down.

If you are part of the real estate industry no matter what area you belong to, you have to be knowledgeable about the current happenings of this industry. This short article will give you some of the reasons why experts in real estate have foreseen that the real estate bubble is about to burst.

The first reason why the real estate bubble is already in the verge of bursting is because of the rapid rise in interest rates. Between June of 2003 and June of 2004, interest rates were at their lowest in history. Such low interest rates have made a lot of people buy homes that are quite costly for their normal purchases yet at still the same monthly rates. But then, these times are gone. And now, interest rates are rising and will still continue rising in the many years. These interest rates are rising as a way to combat inflation with increasing food and gasoline costs. With higher interest rates, owning a home already becomes more expensive that is why most home selling prices have gone down.

The second reason why the real estate bubble is already in bursting is that new home buyers are not anymore able to buy new homes with their expensive price tags and more expensive interest rates. It seems that the real estate market has become a pyramid scheme meaning if the number of buyers is increasing, then everything is just fine. With high real estate property prices and higher interest rates, a lot of new buyers are now going out of the market. Sales are going down and inventories of available homes for sale are rising.

And the last reason why the real estate bubble is already about to burst is that the overall psychology associated with the real estate market has changed. In the past five years, the success of real estate market has increased that if you bought one during these times, you have more chances of making more money. This has made a lot of people invest in the real estate market. In a bubble market like the real estate, its psychology is known as herd mentality where everyone follows the herd. However, mindsets in association with the real estate market are changing. Real estate investors are now becoming scared to be dealing with real estate properties that will make them lose their money more.