Is the Real Estate Bubble Going to Burst?
Author: Russ Whitney
Source: articleage.com
A question we're all hearing a lot these days is: "Is the real estate bubble going to burst?" All the financial pundits are eager to give their opinion, and it's often one of doom and gloom. It seems that some reporters and even some analysts are comparing today's real estate market with the rise and fall of dotcoms in the late 1990s. It is not an apples-to-apples comparison.
Real estate markets are local. The general market in one area can be booming while a few hundred miles away, the market is flat or declining. And there are strategies for investing in each type of market--growing, flat, declining--that will allow you to generate cash flow and build wealth no matter where you are.
Are the booming markets due for a bust? I don't think so. At the worst, we can expect to see the rate of valuation increase slow down in some areas, but we aren't likely to see values decline in most areas--and if we do, it will not be a significant amount.
This shouldn't have a significant impact on investors who own income-producing real estate. Here's an example to explain why: Let's say you own a four-unit apartment building. For the last three years, the property's value has been increasing at 10-15 percent per year, then suddenly it drops to an appreciation rate of just 3 percent. Are you going to reduce your rents just because your appreciation rate has changed? Certainly not. Your rents will remain in line with the market and will be generating positive cash flow while you continue to build equity in the property.
The real estate market, just like the overall economy, is subject to cycles. Savvy real estate investors understand those cycles and know how to deal with them. People are always going to need places to live and work. That means as long as there are people on this planet, there will be opportunities in real estate. Don't worry about the "real estate bubble" -- instead, focus on using proven investment strategies that will allow you to make money and build wealth in any market.
Russ Whitney, chairman and CEO of Whitney Information Network, Inc., is a recognized worldwide leader in the real estate investment and financial training fields. He is the bestselling author of Building Wealth (Simon & Schuster); Millionaire Real Estate Mentor (Dearborn Trade Publishing), and The Millionaire Real Estate Mindset (Doubleday). Russ Whitney has also produced numerous successful investing and personal development training programs on general wealth-building, real estate investing, stock investing, communications, selling skills, credit, and more. For more opinions and comments by Russ Whitney, visit his blog at http://www.russwhitneyblog.com
DFW Real Estate Bubble?
Author: Harry Ridge
Source: articlesbase.com
For a long time now we have been hearing about a real estate bubble and the burst of that bubble. This bursting of the bubble theory is in reaction to the substantial increases in home values in many areas of the county, has recently grown into almost a full-blown paranoia, largely fed by the media and talking heads news reporters. This thought of the “bursting” of the real estate bubble seems to be based on not much more than the collective fear that real estate values throughout the country may, at any time “fall off the cliff”. However, there seems to be no rationale reasoning that supports this fear; just that prices are too high and can’t go any higher.
Phoenix Real Estate – Boom or Bubble?
Author: David Comeau
Source: articleage.com
With the current appreciation of real estate in recent years, you can not go anywhere without someone talking about his latest real estate deal. With the bitter taste of the Internet bubble is still fresh on everyone's lips, one can not help but worry about a bursting housing bubble like in the near future. As to the facts is the only measurement of real property or not in the Phoenix-Mesa-Scottsdale metropolitan area will see a sharp decline. Property Price Income Ratio - This ratio is often used to imply an imminent housing bubble forming, but this is not correct. While revenues have not kept pace with home prices in Maricopa County, the best figure to consider is the cost of servicing mortgage debt to income rate. This number allows us to see if people can pay their mortgages on their property, since most people carry debt on their property. For the Phoenix metropolitan area, the figure is currently 21% for the Phoenix metropolitan area, compared with an average of 30% for the top 20 U.S. metropolitan areas. This makes property in the Phoenix metropolitan area surprisingly attractive, with 3-year appreciation of 69%. The "Catch Up" Effect - Much of the current appreciation we are seeing in the Phoenix metropolitan area can be attributed to poor performance during the '80s and '90s. During this period, house prices were relatively flat, so that the current increase in prices can be viewed as a "catch up" effect. Future employment in the Phoenix metropolitan area - A drop in home prices is rare, and the median home price in the U.S. has not decreased since the Great Depression of the 1930s. Local markets have experienced declines accompanied by sharp declines in the local labor market. The 3 years of work for the growth prospects of the Phoenix metropolitan area is a solid 4.8%, compared with the national average of 2.4%, making a strong argument that housing prices will not fall. Climate of the mortgage for the Phoenix metropolitan area - 18% of mortgages in the Phoenix metropolitan area are over 90% of the value of real estate, making the risk of exclusion in the minimum area. While a rising interest rates cool the recent growth we've seen in home values, would only make the area in line with the national average cost of debt service to revenue rate mortgage. After looking at the numbers, it is clear that Phoenix AZ real concerns of the property bubble are overblown. Employment growth for the area is good and foreclosure risk is minimal. While past performance can not guarantee future growth, the future looks very bright for real estate investment in the Phoenix metropolitan area. A cooling in the assessment may occur if interest rates rise quickly, but this would be far from the stock market bubble was. But even with the current increase in mortgage rates, the Phoenix area is still seeing appreciation in real estate. For more information about real estate in Maricopa County, Arizona, please visit http://www.maricoparealestate.net/