Is Real Estate Approcahing A Bubble?

Comments(9)

• 
  rajwarrior28th July, 2004

  Well, if we're going to talk about an article let's put up the url so everyone can easily find it
  
  http://money.cnn.com/2004/07/27/real_estate/buying_selling/irrational/index.htm
  
  Now, personally, I've got several opinions on this.
  
  First, real estate is not like the stock market and it is especially not like the internet stocks of the 90s, so directly comparing the two is a poor mismatch at best.
  
  Second, the article gives some very good points. The list at the end is a very good example of what not to do if you're going to invest in real estate. However, the key point is not clearly spelled out, which was inexperienced, uninformed people are becoming "investors" and currently being successful simply because the market that they're buying in is appreciating fast enough to make up for any lack of foresight that they had when buying.
  Now in those cases, yes a definite bubble is forming and when it pops, there will be "investors' who will lose big time.
  
  However, there is not and will not be a national housing "recession" or depression. And if you're an informed and intelligent investor, and treat this like the business that it is, then you will be way on top if and when the bubble bursts.
  
  Roger

• 
  sharpREI_PA28th July, 2004

  Thanks rajwarriour for your reply...
  I wasn't sure if I was allowed to post the URL so I avoided doing so.
  
  But anyway,
  I agree with you cause it seems anybody and everybody is getting into real estate these days thanks in part to the late night gurus who make it sounds like a turn key operation where you just sit back and watch the dollars roll in.
  
  Some get in for the wrong reasons while some are just not knowledgable enough or been given wrong info.
  
  Any other opinions..
  
  Chris

• 
  monkfish28th July, 2004

  The comparison is ludicrous.
  
  The tech bubble was driven by sublime greed and stupidity, the advent of soccer mom day traders and more succinctly www.dot.com stocks with negative earnings, ie companies worth less than nothing.
  
  Here's an excerpt from a recent Newsweek article titled, "Bursting Bubbles," with economic pundits weighing in on the topic.
  
  "There are signs that U.S. real estate may be peaking. Rental prices have dropped in Seattle and San Francisco, and in some cities sellers are cutting asking prices. But consensus opinion remains sanguine (optimistic). Next year Shiller will reissue "Irrational Exuberance," his prescient 2000 warning against the stock bubble, with a new chapter on global property markets. He says he's concerned about a housing bubble, "but just concerned." Morgan Stanley's U.S. economist Richard Berner says housing prices will "rust, not bust," and that the threat of household debt is overblown. The chief economist for the National Association of Realtors, David Lereah, represents the optimistic extreme. He says that U.S. house prices have never ended a year with a nationwide decline since the data were first collected in 1978, and are not about to fall now. His upcoming book sums up the realtors' view: "Are You Missing the Real Estate Boom?" In the world's hottest markets, though, buyers may already have."
  
  http://msnbc.msn.com/id/5359494/site/newsweek/
  [addsig]

• 
  ChasG28th July, 2004

  The way I see it - it doesn't ultimately matter. Money can be made in up markets and in down markets. Contrary to popular belief there were quite a few people who made tons of money during the depression. Just like there were people who made money in the 80's stock crash and of course there were people who made a great deal of money during http://www.the.com bust.
  
  I feel like the poeple who really get hurt are those that try and "time the markets". It is my belief that if you are creative, resourceful, and willing to work, then you will be able to make money in any market - up or down
  
  Just my opinion.....

• 
  joel28th July, 2004

  If you guys find articles of interest from around the internet, please submit them in the Articles area.
  
  Just write a brief synopsis of what is in the article and submit the URL.
  
  You might as well get credit in the Members area if you are going to submit URLs of interest to other investors, right??

• 
  InActive_Account28th July, 2004

  I hope the bubble burst soon and hard. Since I own very little properties I can buy cheap and sell high when it turns around in a few years.

• 
  netfreeze200028th July, 2004

  Isn't there anyone who remembers early 90's when the real estate prices dropped by about 70%? There has to be some people. It happened not too long ago.

• 
  sharpREI_PA29th July, 2004

  Was there a feeding frenzy in the early 90's due to the drop in real estate prices?
  
  They could be a good thing for people just starting out, right?
  
  Opinions???
  
  Chris

• 
  rajwarrior2nd August, 2004

  Real estate prices dropped 70%? That said as a blanket statement across the board (ie on a national level) simply isn't true. Maybe that happened in your market area, but it didn't happen everywhere.
  
  The market of the 90's did the same thing the market will probably do soon. Areas that have been booming for the last few years will start to correct themselves to normal levels. The areas that will be hit the hardest are the ones that have been growing the most rapid. A stable appreciation of property is about 3% per year or so. Anything higher will at some point reach a bubble and the market will begin to try to correct itself.
  
  Does that mean that properties will drop by 70%? In some areas, and with some properties, it is entirely possible. As I said before, though, an informed investor who makes intelligent decisions will not only "weather the storm" so to speak, but will likely profit greatly from it.
  
  Roger