The real estate bubble

[darkangel11]

I've been looking at the local real estate market for quite some time. People are buying like crazy. Less and less of them are choosing to hold money in the banks and everyone is telling me to buy real estate. This seems to be the dream of every young and old, to have a portfolio of apartments for rent. Who is going to live in your apartment when everyone around you starts to own a spare one? There's not enough people coming to towns to satisfy the market.
At the same time companies are building more and more. There's flats and houses for sale everywhere and new ones are cheaper than the old ones. Why? Because people bought them years ago for e.g. 100k USD and then invested another 20k into remodelling and furnishing. They would like to get at least 100k back, but developers are pumping cheap new flats for 90k now, who's going to buy a used, older one for 100?
These sellers are now waiting because they think it will normalize, but it won't because new ones are still built.
In a couple years people will start lowering the prices of old properties to be able to sell at all and developers will run out of options, because they are building on credit, they have to keep selling. The real estate bubble will have to burst, it's inevitable.

Are you noticing the same pattern around you where every person is trying to save up for a house to rent or buy cheap, remodel and sell with a profit (so called swaps)?

[pitiflin]

Definitely not the case in the country I live. Too many fucking restrictions. And there's no way in hell are new apartments cheaper than the old ones. The old ones are getting renovated or totally destroyed. And new ones come up again. And the newer buildings are fucking expensive, like too much. I don't think the situation you're talking about is prevalent everywhere, its mostly only in the US or in cheap developing countries. One factor that needs to be considered here is where the buildings are being built. From your case, I think people are buying the apartments in the outskirts of any given city and overtime people will start moving there and the rent/land value will go up.

[The Sceptical Chymist]

I pay a passing attention to the real estate market, but I've never owned property because there's not another asset class that depreciates so rapidly (except for the automobile one, which I also have no part of).  You have to insure the house, pay taxes on it, make sure the pipes don't freeze, etc.  Not worth it for me.  But that's not to say I don't appreciate the benefits of owning property. 

Still, the market does intrigue me when it moves.  I was aware of people buying properties in order to flip them back in 2006-07, and I found that interesting.  I've not noticed anything going on recently, but I'm sure it's happening.  I would imagine the real estate market should have rebounded by now from the 2008 banking/housing crisis.  All I can say is, if you're buying a home, make sure you can afford it.  That's what got a lot of people in trouble 10 years ago.  And I say it's much better to rent than to buy.

[rohitkaira]

Globally story is same, investors these days prefer investing in real estate due to various reasons including lower returns from banks on savings and lower interests on house loans or investment loans, in some countries you can claim tax benefits by investing in housing, non taxable income by renting direct to tenants and cash rent payments and airbnb like businesses offer more opportunities to earn more money. But still i think is this is not sustainable because everyone start investing in the same way than we have more home than people that result into lesser demand means lower house prices and more houses means lower rents in the end no or negative returns, which result into more and more people will exiting market to protect their investments and create chaos or market melt down.

[Nolimitz84]

Yes, real estate has always been attractive to those who have money.It used to be the coolest investment.Now there is no such demand as before.From the provinces, people move to big cities and live and rent there.I know one person who bought apartments without repair.After the purchase was doing repairs there and resold the apartment.And today this man is rich.

[Hydrogen]

Liabilities and cost of living are increasing @ a greater pace than wages for the majority of people. This negative trend makes it more difficult for people, on average, to afford real estate annually. Every year real estate, university education, healthcare and assorted expenses become more difficult to afford.

This trend could make real estate a bad investment as it could imply demand will decrease yearly on the dwindling buying power of consumers. Decreases in demand could translate to lower prices being necessary to sustain purchasing volume.

There are potential points which could offset this trend. Demand from foreign investors is typically high. There are many wealthy demographics from foreign countries who wish to buy land or real estate and legally immigrate to america. This is likely one key figure preventing a second US housing bubble from collapse.

Home and real estate development also has not kept pace with population growth. This makes real estate a somewhat scarce commodity which also potentially inflates price. This could imply that real estate is overvalued and there will be a significant price correction if or when real estate development keeps pace with population growth.

This is a tough topic to breakdown and analyze. What makes it even harder is practically no one in the media giving a fair or objective overview on things.

Has everyone seen the volcanic eruption in hawaii? I've been looking at real estate prices there thinking there could be a significant price reduction for land near an active volcano with real lava. But it seems even there, prices are not decreasing. Real estate markets are crazy. I would be very careful if I were a buyer.

[Jennifer_Elam]

I see this a lot too around here. There's way too many new houses going up, and the people who construct them can't fill them, so they're all hanging around waiting for people to come by. Now a lot of university students are moving in, so they will fill some of them, but whatever's left after that will drop at least 30% in the fall.

The government is also supporting it as they're incentivizing the destruction of old properties for newer ones, and then moving all of the residents who can't afford houses for twice or three times the price of their previous ones to the outskirts of the city.

[cityhall]

Not where I live.  In my place, property price is rising every year.  This is triggering the increase conversion of agricultural land to residential land or real estate and industrial park.

[Coin-1]

At the same time companies are building more and more. There's flats and houses for sale everywhere and new ones are cheaper than the old ones. Why? Because people bought them years ago for e.g. 100k USD and then invested another 20k into remodelling and furnishing. They would like to get at least 100k back, but developers are pumping cheap new flats for 90k now, who's going to buy a used, older one for 100?
These sellers are now waiting because they think it will normalize, but it won't because new ones are still built.

The profitable investments in real estate mostly depends on the district of the city. The best way is to buy an elite house and rent it out. The demand for these apartments is almost always high.

Yes, developers use the new technologies and build a cheap flats, but this trend will impact on the prices of the average cost's real estate, not on the premium class.

[nicster551]

I've been looking at the local real estate market for quite some time. People are buying like crazy. Less and less of them are choosing to hold money in the banks and everyone is telling me to buy real estate. This seems to be the dream of every young and old, to have a portfolio of apartments for rent. Who is going to live in your apartment when everyone around you starts to own a spare one? There's not enough people coming to towns to satisfy the market.
At the same time companies are building more and more. There's flats and houses for sale everywhere and new ones are cheaper than the old ones. Why? Because people bought them years ago for e.g. 100k USD and then invested another 20k into remodelling and furnishing. They would like to get at least 100k back, but developers are pumping cheap new flats for 90k now, who's going to buy a used, older one for 100?
These sellers are now waiting because they think it will normalize, but it won't because new ones are still built.
In a couple years people will start lowering the prices of old properties to be able to sell at all and developers will run out of options, because they are building on credit, they have to keep selling. The real estate bubble will have to burst, it's inevitable.

Are you noticing the same pattern around you where every person is trying to save up for a house to rent or buy cheap, remodel and sell with a profit (so called swaps)?

People tend to buy things on hype and would try to get in as fast as they can do. In the end they will get into a lot of trouble because they were not thinking like a proper investor.

[kryptqnick]

The real estate bubble will have to burst, it's inevitable.
Are you noticing the same pattern around you where every person is trying to save up for a house to rent or buy cheap, remodel and sell with a profit (so called swaps)?

If people are buying houses, remodelling them and then selling, it is a normal and safe practice. It would be problematic if they had mortgages on the houses and couldn't pay them out, like during 2008. Okay, new flats are cheaper than the old ones. This is weird, but not bubbly, since low prices mean low demand, while bubbles are about very high demand for essentially empty offer. In my country real estate prices are lower now than they used to be about 5 years ago, but well-furnished new flats are obviously more expensive than the old ones.

[Kingsingle]

If I invested in real estate I would choose to invest in Crypto, because in this market I am flexible and can make a profit in a short time, without the need to do the tricky procedure such as buying land.

[dothebeats]

Real estate has been the go-to of people who want to make some serious buck for the past 10 years, at least back in the Philippines. Crop fields are slowly being bought and turned into subdivisions, apartments, townhouses etc. and I start to wonder whether they have these units sold or are they creating buildings to waste? The lucrative amount of money made in real estate, alongside the amount of credit needed to develop the land is staggeringly astonishing, and one way or another, it has to implode from within. As for your situation, I still think it depends highly on where does a developer want to start his/her estate. Typically, the metros is a good starting point in creating such apartments because the demand is high, while countrysides, on the other hand, are mostly built houses which is straight up being bought by people who have the means to do so.

[Jimmi Andersen]

In addition to crypto-currencies, I'm still engaged in real estate, buy and then resell. I have in the country and in the region, there are no problems with the purchase of new or old apartments, we have near the sea ))) a Resort town, in the summer a lot of tourists. Therefore, I do not experience such a difficult problem as the author. I also want to say that real estate is a good resource that can reliably save your money. Most importantly, your apartment, land, house etc. were very promising. For example, sea, ocean, lake, forests, new trails, mountains, etc.

[davis196]

The only factor that is pumping the real estate bubble are the mortgage loans.
If the are no mortgage loans,the real estate price will remain low and this will have a positive socal effect.Young famillies with children will afford bigger houses at a cheaper price/or lower rent.
We are heading over to a new real estate/financial crysis,because of the banks.

[Indamuck]

I pay a passing attention to the real estate market, but I've never owned property because there's not another asset class that depreciates so rapidly (except for the automobile one, which I also have no part of).  You have to insure the house, pay taxes on it, make sure the pipes don't freeze, etc.  Not worth it for me.  But that's not to say I don't appreciate the benefits of owning property. 

Still, the market does intrigue me when it moves.  I was aware of people buying properties in order to flip them back in 2006-07, and I found that interesting.  I've not noticed anything going on recently, but I'm sure it's happening.  I would imagine the real estate market should have rebounded by now from the 2008 banking/housing crisis.  All I can say is, if you're buying a home, make sure you can afford it.  That's what got a lot of people in trouble 10 years ago.  And I say it's much better to rent than to buy.

There are quite a few automobiles that appreciate in value (limited model high end brand models).  Owning a house can be a major headache and in the USA you never really own your house.  The U.S. government can take any piece of property they want.  How can you ever truly own something if you are basically paying rent (property tax) to the government.  So ownership in most places is just an illusion

[Komobit]

There is a guy named Peter Schiff

https://www.youtube.com/user/SchiffReport

He is one of the best about Government macroeconomics

He almos endorses everything about this topic

*dont mind the bs that he talks about cripto

[1Referee]

The only factor that is pumping the real estate bubble are the mortgage loans.

In other words, debt.

If the are no mortgage loans,the real estate price will remain low and this will have a positive socal effect.Young famillies with children will afford bigger houses at a cheaper price/or lower rent.
We are heading over to a new real estate/financial crysis,because of the banks.

It also applies to the stock market and other sides of the world economy. Everything is largely based on debt and we have enough historical evidence that these debt bubbles always pop. It may take a while before it pops and it's impossible to point out when it will pop, but it will pop and for that reason people should use Bitcoin as hedge to be on the safe side. If everything implodes you won't be as much affected as those who haven't taken any steps to lower their exposure to this shitty system.

It has never been easier for people and businesses to take out a loan (easier than before the credit crisis years ago), even if you aren't capable of paying it back or have no (partial) collateral. Even people with their own money are no longer saving it due to the extremely low interest rates; this money ends up in the same pool as where the debt money lands in. No wonder everything is badly pumped up right now. It's a great time for sellers, but not for buyers trying to make a buck. The risks are not worth it anymore.

[Kemarit]

I've been looking at the local real estate market for quite some time. People are buying like crazy. Less and less of them are choosing to hold money in the banks and everyone is telling me to buy real estate. This seems to be the dream of every young and old, to have a portfolio of apartments for rent. Who is going to live in your apartment when everyone around you starts to own a spare one? There's not enough people coming to towns to satisfy the market.
At the same time companies are building more and more. There's flats and houses for sale everywhere and new ones are cheaper than the old ones. Why? Because people bought them years ago for e.g. 100k USD and then invested another 20k into remodelling and furnishing. They would like to get at least 100k back, but developers are pumping cheap new flats for 90k now, who's going to buy a used, older one for 100?
These sellers are now waiting because they think it will normalize, but it won't because new ones are still built.
In a couple years people will start lowering the prices of old properties to be able to sell at all and developers will run out of options, because they are building on credit, they have to keep selling. The real estate bubble will have to burst, it's inevitable.

Are you noticing the same pattern around you where every person is trying to save up for a house to rent or buy cheap, remodel and sell with a profit (so called swaps)?

At least not in my place though. Houses bought years ago can still be sell at a premium price and those buyers are willing to do invest some re-modelling and get it ready to be rented. I have 2 houses in my neighborhood which was bought at a high price and the new owners are now renting it, and the thing is people are willing to get it even if the rent price is very high. That's why the rich becomes richer here. I myself bought a apartment 10 years ago and now its worth like 4-5 times its original price. Others though would make a bank loan and have the house rented and then the monthly rent pay goes to the mortgage. So I guess the demand is pretty high here that people are still willing to buy premium houses have it rented or just pure investments.

[jseverson]

Is this a new trend at all? I mean, I'm sure the overwhelming majority of people wants to own a home at some point, so it's not like the demand is only for people who want to rent out their 2nd or 3rd apartments.

Real estate is generally sound for as long as you have an actual need for it. There may be more supply than demand in some areas now, but who knows how long it will stay that way. It's kind of like Bitcoin in that sense, where we know it will not be enough for everyone somewhere down the line. For as long as you're not putting all your eggs in the real estate basket, you should be relatively safe. This is one investment where "inherent value" is very relevant.