Beware of Bubbles
Yet another article today warned of a housing bubble. Here's the article:
http://finance.yahoo.com/blogs/the-exchange/housing-market-gets-bubbly-again-192116054.html
Sometimes I feel like Chicken Little, but I really believe that the
current housing market will not continue for long and prices will
correct.
A couple of pull-quotes:
The recovery has been fueled by artificially low interest rates
engineered by the Federal Reserve, and virtually all new mortgages these
days are underwritten by the back-from-the-dead federal agencies Fannie
Mae and Freddie Mac.
Worse, more than one-quarter of all homeowners with a mortgage are
still “underwater” on their homes, owing more than the property is
worth.
As the article points out, when interest rates return (and they
will) to 6-8%, we will see what's really going on. People won't be able
to buy the house that they could now.
Again, this points to defaults, foreclosures and the ability to
pick up houses at deep discounts. As prices rise in the short term, real
estate investors may need to buy in different areas and market directly
to motivated sellers. Those who stay in the game and find a way to win
will be rewarded!
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