Friday, October 13, 2006

Is the Housing Bubble Ready to Burst?

Over the last five years home prices have skyrocketed and new home construction has kept pace. "he deceleration has been the fastest in history. Has the day of reckoning come, is the real estate market in for a total collapse, or is it just in for a "soft landing" that most of the market optomist have hoped for?

With most developers cutting back on construction as overproduction have left them with big inventories of unsold homes, plummiting home prices and lower interest rates might bring a flurry of new buyer which might just temporarally relieve the pain.

Housing is a multiplier industry, the impact of the growing real estate crisis impact is felt into many other industries that depend on it. Financial instatutions, lumber manufacturers, furniture stores, cunstruction related work, and other are dependent on this "economic bubble", which is the biggest in history of Canada.

Will its collapse recreate the same resecion of 1929, or is it just a bunch of hype? We dont know just yet. One thing is for sure, the artificailly priced market of 2005 is finally getting back to reality and if you have any plans on buying a home, now is the time to do it. Prices are comming back to reality, interest rates are
dropping, and good deals are abundent.


Anonymous Anonymous said...

The housing 'bubble' reminds me of the year 1979. Oil prices were booming; gold prices were booming; and yes, real estate was booming. In 1980/81, oil prices plummeted, and gold and housing.
Today, in the US, real estate starts are dropping and Merril Lynch is saying that there is a 45% chance US will be hit by a recession in 2007. If a recession hits the US, Canada will be a few months behind. It's all about 'cycles'.

1:57 AM  

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