Who is responsible for the real estate bubble
- Flipping became a new job for people
- Now prices are falling again…
- The entire real estate market is tied up in a knot…
Who is responsible for the real estate bubble and all its repercussions? It certainly wasn’t the people who got a mortgage. What really happened in the major markets was that construction firms flocked to certain places and stared building twice as many houses as were sold in that market before. Who bought these houses? The average person didn’t buy twice as many homes. The average person didn’t see their income double. But the prices of homes did double.
It was the investors who came in to buy these houses that were responsible for this as the home prices were increasing quickly and they flipped them. Flipping became a new job for people for about five years or more. Then what happened; the bubble broke and the market fell as much as 60 percent in some markets. Then, who stepped in – more investors, however this time they weren’t flipping houses, they wanted to rent them to the people who lost theirs.
Now that prices are falling again there’s fewer investors. The markets are slowing down with the highest number of listings in a long time. Foreclosure sales, auctions sales, and short sales are all falling. So what is the result going to be?
There’s not less people defaulting on their loans, in fact there’s millions of people defaulting. This will drive prices down even more if the lenders go through with foreclosure, However the lenders see this, and also see that if they foreclose they now own the home and the responsibilities that come with it and that’s why foreclosure rates are the lowest in eight years. The entire real estate market is tied up in a knot that nobody can seem to untie.
QUESTION: What should readers take away from this message today?
ANSWER: That most of you weren’t the reason for the real estate bubble.
QUESTION: Why is this information timely?
ANSWER: This information is timely because people are still being threatened with foreclosure. But if their home can’t be sold at auction they will still be the owner for a long time.
QUESTION: How can readers best apply this information to their lives right now?
ANSWER: If you feel threatened by foreclosure proceedings – don’t be. If and when your property could sell there will be many rental units to choose from.
COMMENTARY: Layer after layer real estate has been plucked clean. Every vulture investor has taken their bite out of real estate leaving nothing but the carcass. The risk is greater than the rewards. It’s just too much of a burden to own real estate for most people. After years of things working against owning it, people are choosing to rent and remain uncommitted and mobile. It’s a lot less stress to pay rent and utilities. In the future, the concept of owning real estate may seem like something people did generations ago.