I see definite signs of the Real Estate market heating up. Whether you voted for our current administration or not, the O’Bama administration is bringing the market out of a stall. With all the money they are throwing at the real estate industry to slow foreclosures, short sales, and to reduce mortgage interest rates plus the $8000 tax credit for first time buyers the market is beginning churn and burn.
Now let’s face the facts. The market’s new construction began to slow over 3 years ago. Inventory is shrinking as homes continue to go to contract. Furthermore, many properties disappear every year due to age, rezoning, and natural disasters. If we continue to add another 3 million citizens every year, then we’re really going to have a real estate shortage in the next 2-3 years.
The tried and true rule of basic economics is that supply = demand. As demand continues to rise, then a shortage of supplies is created. Therefore, prices begin to rise. The stimulus bill will likely put extraordinary pressures on our economic system which will create extreme INFLATIONARY pressure. You just can’t spend and spend without having to repay. The repayment comes in the form of inflation….prices increase!
Some forecasters are predicting that property values will likely double from the highest times in the market in 2006 due to inflationary pressure.
Understand this, if you’re home was worth $200,000 in June of 2006, then within the 5 years it could be worth over $400,000. All this due to inflation. Take a look at history, the 1920’s stock market growth lead to the 1930’s crash. The 2000-2005 boom years in real estate propelled national growth by 80% GDP. This lead to our bubble bursting this year.
So, if history holds true, then it’s going to be difficult to escape the inflationary pressure this will bring to our nation. But, the good news is that the Real Estate market will thrive.
If the Real Estate Market is Turning, What Does That Mean?
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