3 of the top 9 reasons that the real estate bubble is bursting
July 10th, 2010 | 
Author: 3 of the top 9 reasons that the real estate bubble is bursting
If you own real estate or are thinking of buying real estate then you better pay attention, because this could be the most important message you receive this year regarding real estate and your financial future.
The last five years have seen explosive growth in the real estate market and as a result many people believe that real estate is the safest investment you can make. Well, that is no longer true. Rapidly increasing real estate prices have caused the real estate market to be at price levels never before seen in history when adjusted for inflation! The growing number of people concerned about the real estate bubble means there are less available real estate buyers. Fewer buyers mean that prices are coming down.
On May 4, 2006, Federal Reserve Board Governor Susan Blies stated that “Housing has really sort of peaked”. This follows on the heels of the new Fed Chairman Ben Bernanke saying that he was concerned that the “softening” of the real estate market would hurt the economy. And former Fed Chairman Alan Greenspan previously described the real estate market as frothy. All of these top financial experts agree that there is already a viable downturn in the market, so clearly there is a need to know the reasons behind this change.
3 of the top 9 reasons that the real estate bubble will burst include:
1. Interest rates are rising – foreclosures are up 72%PRCTG%!
2. First time homebuyers are priced out of the market – the real estate market is a pyramid and the base is crumbling
3. The psychology of the market has changed so that now people are afraid of the bubble bursting – the mania over real estate is over!
The first reason that the real estate bubble is bursting is rising interest rates. Under Alan Greenspan, interest rates were at historic lows from June 2003 to June 2004. These low interest rates allowed people to buy homes that were more expensive then what they could normally afford but at the same monthly cost, essentially creating “free money”. However, the time of low interest rates has ended as interest rates have been rising and will continue to rise further. Interest rates must rise to combat inflation, partly due to high gasoline and food costs. Higher interest rates make owning a home more expensive, thus driving existing home values down.
Higher interest rates are also affecting people who bought adjustable mortgages (ARMs). Adjustable mortgages have very low interest rates and low monthly payments for the first two to three years but afterwards the low interest rate disappears and the monthly mortgage payment jumps dramatically. As a result of adjustable mortgage rate resets, home foreclosures for the 1st quarter of 2006 are up 72%PRCTG% over the 1st quarter of 2005.
The foreclosure situation will only worsen as interest rates continue to rise and more adjustable mortgage payments are adjusted to a higher interest rate and higher mortgage payment. Moody’s stated that 25%PRCTG% of all outstanding mortgages are coming up for interest rate resets during 2006 and 2007. That is %2 trillion of U.S. mortgage debt! When the payments increase, it will be quite a hit to the pocketbook. A study done by one of the country’s largest title insurers concluded that 1.4 million households will face a payment jump of 50%PRCTG% or more once the introductory payment period is over.
The second reason that the real estate bubble is bursting is that new homebuyers are no longer able to buy homes due to high prices and higher interest rates. The real estate market is basically a pyramid scheme and as long as the number of buyers is growing everything is fine. As homes are bought by first time home buyers at the bottom of the pyramid, the new money for that %100,000.00 home goes all the way up the pyramid to the seller and buyer of a %1,000,000.00 home as people sell one home and buy a more expensive home. This double-edged sword of high real estate prices and higher interest rates has priced many new buyers out of the market, and now we are starting to feel the effects on the overall real estate market. Sales are slowing and inventories of homes available for sale are rising quickly. The latest report on the housing market showed new home sales fell 10.5%PRCTG% for February 2006. This is the largest one-month drop in nine years.
The third reason that the real estate bubble is bursting is that the psychology of the real estate market has changed. For the last five years the real estate market has risen dramatically and if you bought real estate you more than likely made money. This positive return for so many investors fueled the market higher as more people saw this and decided to also invest in real estate before they ‘missed out’.
The psychology of any bubble market, whether we are talking about the stock market or the real estate market is known as ‘herd mentality’, where everyone follows the herd. This herd mentality is at the heart of any bubble and it has happened numerous times in the past including during the US stock market bubble of the late 1990’s, the Japanese real estate bubble of the 1980’s, and even as far back as the US railroad bubble of the 1870’s. The herd mentality had completely taken over the real estate market until recently.
The bubble continues to rise as long as there is a “greater fool” to buy at a higher price. As there are less and less “greater fools” available or willing to buy homes, the mania disappears. When the hysteria passes, the excessive inventory that was built during the boom time causes prices to plummet. This is true for all three of the historical bubbles mentioned above and many other historical examples. Also of importance to note is that when all three of these historical bubbles burst the US was thrown into recession.
With the changing in mindset related to the real estate market, investors and speculators are getting scared that they will be left holding real estate that will lose money. As a result, not only are they buying less real estate, but they are simultaneously selling their investment properties as well. This is producing huge numbers of homes available for sale on the market at the same time that record new home construction floods the market. These two increasing supply forces, the increasing supply of existing homes for sale coupled with the increasing supply of new homes for sale will further exacerbate the problem and drive all real estate values down.
A recent survey showed that 7 out of 10 people think the real estate bubble will burst before April 2007. This change in the market psychology from ‘must own real estate at any cost’ to a healthy concern that real estate is overpriced is causing the end of the real estate market boom.
The aftershock of the bubble bursting will be enormous and it will affect the global economy tremendously. Billionaire investor George Soros has said that in 2007 the US will be in recession and I agree with him. I think we will be in a recession because as the real estate bubble bursts, jobs will be lost, Americans will no longer be able to cash out money from their homes, and the entire economy will slow down dramatically thus leading to recession.
In conclusion, the three reasons the real estate bubble is bursting are higher interest rates; first-time buyers being priced out of the market; and the psychology about the real estate market is changing. The recently published eBook “How To Prosper In The Changing Real Estate Market. Protect Yourself From The Bubble Now!” discusses these items in more detail. For more information visit www.MyRealEstateBubble.com
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Answering Phoned Inquiries About The Home You Are Selling
Answering Phoned Inquiries About The Home You Are Selling
When you are selling your home, expect a lot of people to ?intrude? on your privacy. If your home is being handled by real estate agents, then most of the calls and inquires would be handled by them. If you are selling your home by yourself, then you?ve got a big job in your hands.
As an independent home seller, you may be flooded by a long line of emails and unending phone calls from potential buyers. Answering emails will not pose much of a problem since you have time to compose your thoughts and you can do those at your own convenience. Handling phoned inquiries is another matter altogether.
One thing you should remember about conducting your business through the phone is that, contrary to what you may think, you are not invisible. The person on the other end of the line can sense your mood at that particular time. If you?re angry, bored or irritated, although they can?t see your facial expressions, they can feel your emotions through the tremor of your voice. With this in mind, try to be warm and friendly. No matter how inane their questions are, do not show your irritation.
In addition to this, you have to know every little thing about your home. It would be safe to assume that you already know the basics (how many bedrooms, toilets, how many cars can the garage accommodate), but you should also be prepared to answer other unexpected questions (i.e. when was the last time you had the property treated for termites). Nothing will irk a buyer more than someone who does not know much about what they are selling.
It would be best if you could attend to all phoned-in inquires yourself. However, in the eventuality that you can?t stay at home, make sure that you leave specific instructions with someone who would be capable of taking these calls. If no one can do the job well, then make sure you can be reached through your cell phone.
Appraised Value: The Ups & Downs Of How Much A House Is Worth.
Appraised Value: The Ups & Downs Of How Much A House Is Worth.
Determining Fair Market Value is an eternal struggle and major balancing act. That?s because buyers want a house to appraise on the low side?to keep the purchase price down. While sellers want the same house to appraise on the high side?to make the sale price higher. And then you?ve got the owners of the house?who also want the appraisal to be on the low side, in order to keep the property taxes down.
So with all these different agendas and points of view, how is the fair market value of a real estate property actually determined?
Once a year, your county sends all area homeowners official notices that put a dollar value on their property. And property taxes are based on those dollar values. But before those notices get sent out, a long, detailed process usually takes place. First, the land is valued as if it?s vacant?an empty lot, in other words. Then any improvements are described and measured. Improvements consist of the house and any other structures, pools, sheds, garages, and so forth. Next, most counties check the Marshall Valuation Service Cost Guide. It?s a standardized nationwide guide for determining the value of the cost per square foot to build a building that fits the description of the improved property. Next, if the house isn?t brand new, the replacement cost is considered, as well as depreciation; the year the house was constructed and the condition of the property are factors here. Appraisers then must take the critical step of comparing the value of the house with recent selling prices of similar homes in the neighborhood. At this point, the appraisal might stand ?as is??or it might be adjusted upward or downward.
Market Value is a theory, in other words?not an unchanging fact.
In a perfect world, you have to have willing buyer and a willing seller. Neither is under duress. Both are in a position to maximize gain and are trying to do this. But in the real world, things are rarely that simple and equally balanced. Which is why people feel differently about the appraisal value of a house. It really depends how strong their position is as a buyer or seller.
Does the local economy come into it at all? You bet it does.
Ask a successful Realtor about that! He or she will tell you they?ve noticed that the Rio Grande Valley?s fast-growing economy is attracting people from other areas who consider real estate here a bargain. That helps fuel increases in property values.
So?now you know where that Grand Total comes from.
You?re armed with the information you need to make a better house-buying decision. For instance, you can understand how two virtually identical houses that are in two different neighborhoods could be very far apart in price and appraised value. And why your choice of the right house in the right neighborhood could be worth a not-so-small fortune to you right now?and years down the road.
Attention: Sir/Madam… I’d Like to Scam You
Attention: Sir/Madam… I’d Like to Scam You
Many people have heard of the “419″ scams. The term “419″ comes from the Nigerian penal code section of that designation that deals with fraud. Despite a widespread belief that the people who get taken by these scams are greedy and stupid, many are not so. Many believe they are donating to distressed individuals and/or charities. These scams have spread into real estate as well, targeting house sellers and real estate agents.
The scam usually opens with a bait letter, assuring the recipient that the person contacting them is a) a widow whose husband left her millions that she cannot safely access due to her evil family, b) a high-ranking military official seeking to move money out of the control of their oppressive governmental regime, c) a representative of a mysterious person high up in the government, or d) a person interested in an item that the person is selling or representing.
If the target responds to the letter, the scammer usually replies with thanks and asks for personal information. Often this includes a bank account number, but this is not, as some people think, how the target is scammed. It is used as a gauge to determine if the target is likely to give money in order to pay “processing fees” or other mysterious charges. Scammers will also provide scans of documents that look legitimate. Many can be – stolen from other people or digitally altered. If called on discrepancies, the scammer will blame poor computer equipment.
In nearly all these scams, urgency and confidentiality are emphasized. The scammer doesn’t want their victim to seek outside aid or take time to think things over. They are depending on the “get it now or you never will!” feeling to encourage the victim to send the money – usually through Western Union or some other money wire transfer company. Once the money is picked up, the person who sent it has no way to get it back.
An example of a real estate related scam:
You get an unsolicited email from someone claiming to be interested in your house. They will send you a large check, many thousands of dollars over the amount you are asking for the property. They then want you to refund the extra money. Or they say that there are “fees” that the seller must pay in their country. In any case, you have to send the money now, Now, NOW because the person interested in your house needs the money to a) come to America b) pay for their cancer operation or c) take their sick mother to the hospital. Sometimes, if you balk at sending a complete stranger thousands of dollars, they may threaten you with “legal action” or embroider the sob story to the point where their sick mother is suffering from cancer, AIDS, measles and ingrown toenails all at the same time.
Real estate transactions are only one of the targets of scammers. The scammer is not interested in your house; s/he only is interested in the money you can send to finance whatever spurious fees are claimed to be involved with the transaction. Don’t send anyone any money or cash checks that are sent to you from an unverified institution or individual. Consult with a real estate professional for advice on how to handle offers via the Internet. Since many people use the Internet to inquire about houses, prices, etc., an email query may be legitimate. Just make sure that the person is legitimate before pursuing a financial transaction.
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Free Foreclosures Listings Can Be Obtained Via The Web
Are you interested in purchasing a home for you and your family? Believe it or not, the perfect time to purchase a home for an extremely low price is now, despite the economic crisis that is still in effect.
Real estate owned foreclosures are abundant in today’s market. Since the economy began to go sour, many people are losing their homes due to foreclosures that are being rendered to them by their lending service. Even though, this means bad news for the people that are being forced to leave their homes, this could equate to good news for people that are interested in purchasing a home.
There are a lot of different ways that you can obtain a list of foreclosed homes around your central area. One way is to turn your attention towards free foreclosures websites. There are a plethora of sites that offer these complimentary services to people that are interested in purchasing a great home for a relatively low price.
Free REO foreclosures websites are a great tool to use in order to locate foreclosed homes that are presently being offered to the general public. The great thing about foreclosed homes is there is nothing wrong with them. People simply did not have enough money to stay in their homes; therefore the bank had to take certain measures to get the individuals to vacate the premises.
Be aware that there are a lot of websites that will offer you to pay for their foreclosure listings. However, you should never have to pay to go house looking, therefore finding a website that does not mandate that you pay for their services is the best type of site to visit.
Foreclosed homes are gorgeous homes for a cheaper price. So, if you are considering purchasing a new home for yourself and your family, you should consider turning your attention towards foreclosed homes to save yourself some time and money.
Americans File Changes of Address Online-And Select Retail Catalogs
Americans File Changes of Address Online-And Select Retail Catalogs
Here’s moving news: According to the National Association of Realtors, “home sales remain at historically high levels.” This means address changes filed with the United States Postal Service will likely also remain high: about 45 million a year, Postal Service officials report.
If you’ll be among those moving Americans anytime soon, you should know that many consider the fastest, easiest and most convenient way to file a change of address is with the Postal Service at usps.com. Other change-of-address options include Telephone Change of Address at 1-800-ASK-USPS and the Mover’s Guide found in Post Offices.
In addition to letters, statements and advertising mail, many movers want to make sure they keep getting their favorite catalogs at their new home. For them, there’s the optional Catalog Request Card Service that is available online with the Change of Address form.
After customers complete the Internet Change of Address form, they can select specific retail catalogs-current or new-or choose “No Thanks.”
Since the program’s inception last fall, participants have chosen to receive an average of six retail catalogs after they move. And most of these are catalogs they were not previously getting. Evidence, Postal Service officials say, that more and more people like to shop via the mail.
Indeed, the Direct Marketing Association expects print catalog sales to hit %158 billion in 2009, up from %152 billion in sales this year. The Association also says that nearly six out of 10 catalog shoppers keep a catalog they order from for at least three months.
“We’re providing this service so that people can have their favorite catalogs on hand when they’re needed most, to organize their homes quickly and easily when it’s convenient for them,” explained Charlie Bravo, senior vice president for Intelligent Mail and Address Quality.
The Postal Service, which gets no taxpayer dollars for routine operations, is an independent federal agency that delivers more than 44 percent of the world’s mail volume-some 212 billion letters, advertisements, periodicals and packages a year-and visits 145 million homes and businesses every day, six days a week. It’s the world’s leading provider of mailing and delivery services, offering some of the most affordable postage rates in the world.
Atlanta Apartment Rentals – Shop where you live
Atlanta Apartment Rentals – Shop where you live
Hunting for an apartment can be a painfully long process. If you have been on the lookout for an apartment in a big city like Atlanta, Georgia, you would have probably realized that it is not very easy to come by. You may find apartments, but when it comes to an apartment of your choice, despite putting your 100 percent effort, you may not find your dream home. By making use of the services of professional Atlanta apartment rental search services, you can now easily find Atlanta apartments, Town homes or Condos in the Atlanta Georgia area. Atlanta Apartments 4 Rent takes the hassle out of your apartment hunting experience by making it easy for you to find an Atlanta apartment that you may have in mind. All you need to do is, sit back and relax while we research the best Atlanta apartments rentals at the best rent rates. And this service comes free to you!
Shops, restaurants and malls just within a few meters from your apartment make for an attractive proposition. And that is exactly what you can get when you use or services. Our apartment rental service is designed to save you both, time and money. We maintain database of thousands of apartments in Atlanta & Georgia, most of which are concentrated in Atlanta. You can either check out all apartment listings or fill in a small form with your own specific requirements. Once you give us your requirements, we find out suitable Atlanta apartments with our apartment finder tools and develop a list of apartments that meet your needs. Browse through the list of Atlanta apartment rentals from your home or office, read the reviews and then decide.
Since our apartment specialists know about the best Atlanta apartment rentals, they will find them for you at the best prices. And if you have been wondering how we can provide you free apartment finder services, we would like to assure you that the Atlanta apartments compensate us. And that?s how our efficient services come 100 percent free to you!
Whatever type of house you may have in mind, we help you find it easily and quickly. Find an apartment that apart from the basic amenities offers all conveniences and great neighborhoods. Whether looking for a large apartment, townhouse or for apartment sharing, settle for the best deals only at atlantaapartments4rent.com!
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Buying a Home in Dallas has never been Easier
If you’re looking for Dallas Real Estate, you’re in luck. USA Realty Services specializes in Texas homes. This company created a website especially for buyers who are looking for their home in today’s stressful Texas real estate market.
While the rest of the country faces a stagnant market, the population of Texas just keeps on growing. Dallas Homes for Sale get snatched up as quickly as they are put on the market and you need to be quick in order to secure the home of your choice. There is no quicker way to do it than through this service.
They have organized their website in such a way that you can easily browse Texas real estate suburb by suburb and choose exactly the location and price range you are after. If you are looking for a home in any suburb of Dallas, simply type in your price range, the suburb and click “Go.” You will get pages and pages of homes, including thumbnail pictures and full descriptions of the properties. You can then choose the property that suits your budget and needs the most and after going through a fast, free, no obligation sign-up process, you can inspect the property online in detail.
Once you have signed up, you can then freely use the service to inspect all properties on the database. Instead of spending fruitless weeks of property inspections, USA Realty makes it easy for you to inspect and purchase Dallas Homes for Sale from the comfort of your home. Try it. Remember, the service is free.
Finding the Best Movers for Your Bucks
Moving to New York is an exciting experience. The great State of New York not only has one of the greatest cities in the world, it is a wonderland of natural riches as well. When you’re moving to New York, you have the magnificent Catskill and Adirondacks to explore, vast tracts of beautiful farmlands and vineyards to visit and enjoy and much much more.
The only catch to moving there is deciding which one of the many New York Moving Companies to use to safely and economically transport your belonging from wherever you come from to New York. Thankfully, this is not a difficult task if you look first to a good online source for comparative quotes and reviews.
Movers-dot-com is such a website. If you are looking for New York Movers, all you have to do is go to their homepage, type in the zip code of the town when you are moving from, select the state and click the big red button that says, “Get Free Moving Quotes.” Notice those two words “free” and “quotes.” You are not paying for this service and you will be getting quotes from several movers with one click of the mouse.
If you are moving from NY to anyplace overseas or from overseas to NY, you can find New York International Movers on this website as well. For that matter, you can find movers to and from just about anyplace in the world from this single, free source of moving information. Check out the Movers website and make your move go smoothly while you sit by a stream in the Catskills catching brownfish.
Advice On Selling A House
Advice On Selling A House
Maybe you’ve read lots of advice on selling a house. But do you know the biggest mistake many people make when selling a house? Not understanding real estate value.
You see, it doesn’t matter what you think your home is worth. It doesn’t matter what youdid to make in nicer for your family. The value of your home is determined by buyers. What you enjoyed about your house may be irrelevant when it’s time to sell. Think in terms of what buyers want, and use some of the following advice on selling a house.
1. Know the market. What other similar houses have sold for? Have those examples ready to show potential buyers.
2. Decide on a minimum price – the price below which you just won’t move. Don’t tell your agent what this minimum is, but negotiate with any buyers who make an offer near or above it.
3. Concentrate on the visible things first. A new mailbox is often a good idea. When buyers fall in love with the house before they even enter it, they forgive a lot of problems.
4. Clean the neighborhood. If a neighbor’s yard is a mess, give their kids %10 to pick up the yard. Spend %20 to put flowers in any common-areas, and buyers will have a better first impression of the neighborhood.
5. If you or your agent aren’t getting many calls, try something new. Is more advertising necessary? Is the price too high? If price is the problem, drop it fast. That perfect buyer might pass on by while the the home is still over-priced.
6. Listen to prospects. They’ll be more objective than you. If you hear several times that the kitchen is dark, get out the white paint.
7. Find the average sales time for your area. If your house is taking longer than average to sell, there’s a problem, and usually it’s the price.
8. Ask your real estate agent what she plans to do – before you sign a listing agreement. Write down what she says, and hold her to her promises.
9. If there are known problems, such as an old roof, get an estimate for repairs. The sellers may want a %7,000 allowance for a new roof – until you show them your %4,000 estimate.
10. Do improvements that can realisically get you at least a two-to-one return on investment. If %300 to seal the driveway is likely to add %600 to the sales price of the home, do it. Always consider first those things that are most visible.
There are dozens of things you can do to sell your house faster, and get a better price. Start with the ones that will get the most “bang for your buck.” Also, read and USE good advice on selling a house.