The Real Estate Bubble-when Will It Burst?
Tuesday 19 February
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by Nicole Soltau
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More and more individuals are realizing that real estate is much safer, and a better return on investment than many traditional investment vehicles. Unlike stocks or bonds, real estate investments can usually be liquidated in order for the investor to access funds in far less time. Additionally, unlike many other investment vehicles, real estate does not come with the stiff penalties associated with early withdrawal. In most cases, investors can liquidate and not have to worry about losing large sums of money. Finally, real estate provides the assurance of a higher yield of return than other types of investment.
On average, real estate appreciates about 4% per year. That means that a property you purchased five years ago, under normal circumstances with no significant wear and tear, would be worth at least 20% more than the amount you paid for it five years ago. Some real estate markets perform significantly better than others at given times and with a mild remodeling or upgrade you could be looking at substantially higher returns on your investment.
Given these facts, itís no wonder so many people are jumping on the real estate investment band wagon. It begs the question however; when will the real estate bubble burst?
There has been some speculation that the wild investment in the real estate market and they hype of outrageous investment returns has no where to go but crashing back down to Earth. After all; how is possible that real estate investments could possibly continue to double as they have in the last few years? Some critics even point to the fall of the real estate market in Japan in the late 1980ís. Homes that were worth thousands of dollars are now only worth a fraction of that amount while the homeowners still owe almost the entire full amount of the first mortgage.
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