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The Bubble Effect

The Bubble Effect

Turn on the TV at almost any time day or night and you will find news and talk shows informing us that there is a Real Estate bubble. What is a "bubble" and how do they know? The simple principle of what goes up must come down is being applied in general thought now and many in the public are starting to buy it. Let's sit down, think logically and see if there is indeed a bubble or if there is room to grow.

Challenge 1: The "Investors" are driving the market upward and when they leave, everything will crash.

This of course is completely false. Let's start by looking at home loans 5-10 years ago. A person with a decent credit score would have to pass a bunch of hurdles and put down 5-10%. On a $200,000 homes, this meant coming up with $10,000 - $20,000. The Internet was around, but still a mystery to most. Fast forward to today. The Internet is widely used by everyone from the grade school child to the senior citizen. The flow of information is simply amazing and because of this people are being educated quickly. People are no longer limited to just those they personally know. Loans are now easier to get. Someone with decent credit can walk into a home with zero down now.

How many people do you know that pay rent on time? How many of those people have $10,000 or $20,000 or more in their account? Thanks to the recent relaxation of loan qualifications, these people were locked out of owning a home as recent as 5-10 years ago can now walk into a home and enjoy the American dream. You see, it is not solely investors driving the market (many are regular people), but the millions and millions of Americans who can now walk into a home with little to nothing down.

Challenge 2: Don't forget about the Tech market crash.

You can't go far without hearing some so-called expert performing a "remember the Alamo" yell about the tech stock crash years ago. Why is this not relevant? The first reason would be that you can live in a home and everyone needs somewhere to live. A stock is just a piece of paper that you can put in the shredder or in a drawer. If it goes to zero you have nothing. What if a home went to zero? You would still have it to live in and enjoy.

The tech market crashed because you had brick and mortar CEO's and personnel trying to run Internet based companies. You had people with no real knowledge of how to make money on the Internet coming up with all sorts of ridiculous ideas. It was destroyed because the majority of the people running the show were not properly qualified and the people investing did not care. To compare this crash with Real Estate is like comparing the Enron fiasco to why you burnt the tri-tip on your BBQ.

Challenge 3: Interest rates will go up and everything will crash.

Will it now? Rates have not jumped up overnight nor will there. Think about this. Let's say you are looking at a home that will require you carry a mortgage of $200,000. Right now you can get it at 6%, but you wait and tomorrow when you wake up, rates went up and it will now cost you 8% (which is a major jump). The difference? $250 per month. If you bought a home just $20,000 less, your mortgage difference would drop to only $100 per month more. This was a huge jump, but would $250 per month stop everyone from buying? Not even close. It would cause some to lower the amount of house they bought slightly. For most, they still buy.

There are more loans for people with bad credit and low incomes than ever before. These are not some wildly high percentage loans either. The ease of loan approval has created millions of buyers all over the country. I would submit to you that if homes in an area come down and correct a little, it is not because of a "bubble", rather because the homes were overpriced in that area to begin with and/or the area's value decreased. You can find out more about Real Estate by visiting my website, Jake Truman.com.

Jake Truman is a Real Estate & Stock investor and Credit informer. Website: Real Estate. He has published a book on Credit Help, which is available at his website.

In The News:

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A lower GST will lead to greater alignment in real estate: Rajnish Kumar Economic TimesA lowering of goods and services tax for under-construction houses would bring about greater alignment in the real estate sector, said SBI Chairman Rajnish ...

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PE firms see bonanza in residential realty sector Times of IndiaIndia Business News: The domestic residential real estate space has been in a rut for years with failed and delayed projects putting buyers off. Developers more ...

No consensus yet on Input Tax credit for real estate The New Indian ExpressThe panel met last week for the first time and unanimously favoured lowering GST on under-construction residential properties.

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PE capital has potential to rescue real estate sector: Panellists at VCCircle LP Summit VCCircleThe dearth of capital and the mismatch between demand and supply are drawing private equity investors to the real estate sector,

GST brought down tax rates for real estate sector: Modi The Siasat DailyNew Delhi: Prime Minister Narendra Modi on Wednesday said that the Goods and Services Tax (GST) has brought down tax rates in the real estate sector along.

Montreal’s Real-Estate Market Is About to Eclipse Vancouver’s BloombergVancouver is on pace to lose its status as Canada's second largest housing market to Montreal.

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Real estate sector sees budget boosting consumer sentiment Economic TimesMumbai: The realty industry has welcomed the interim budget saying the many tax proposals will give the needed fillip to the sector that has reeling since the ...

I-T assessment error caused loss of Rs 6,000 cr in real estate taxes, reveals CAG report The Financial ExpressThe CAG scrutinised only 22% of the 78647 assessments made during this period, and said ITD needed to internally audit the remaining assessments to pin ...

Proposals of GoM panel on real estate may address homebuyers' input tax credit woes Moneycontrol.comThe recommendations are "aimed at reducing the impact of GST on the end-consumer and simplifying the compliance requirements of the developer. Vandana ...

(Un)real estate | TNS The News on SundayWith strict regulation on cards, real estate will offer realistic returns and mind-boggling profits will become a thing of the past.

'Million Dollar Listing' agent Ryan Serhant: Buyers are 'freaking out' about Amazon ditching NYC CNBCDevelopers and speculators — who bought property on the promise of Amazon's planned New York City headquarters — are "freaking out," now that the ...

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Actis plans to launch $500-mn India-focused real estate fund this year Business StandardActis, the UK-based fund manager, wishes to launch a $500 million (Rs 3,500 crore) India-focused real estate fund this year, said sources in the know.

How Amazon's decision to abandon New York affects real estate market CNBCCNBC's Robert Frank reports on how Amazon's decision not to follow through with its headquarter plans in New York City has affected the real estate market in ...

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Investors brace for sobering outlook from landlords, real estate Brisbane TimesInvestors will get a glimpse into the perilous housing and retail markets this week when major landlords and property specialists report their December half ...

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‘All real estate companies filed reports without PAN details’ Times of IndiaAHMEDABAD: All the real estate companies from Gujarat that filed audited reports with the registrar of companies (ROC) did not mention their permanent.

Real estate investors could have been killed in booby-trapped Philadelphia house NBC NewsA team of Philadelphia real estate investors said a house they purchased was booby-trapped with a swinging knife that could have seriously injured or killed ...

Budget 2019: Real estate benefits from populism; breather for builders and buyers Business TodayAcknowledging the slowdown in the real estate sector, the government's populist budget has outlined measures to ease fiscal burden of developers while ...

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Deconstructing Budget 2019: What's in it for homebuyers and real estate developers Moneycontrol.comThe proposal that no notional rent will be levied on second self-occupied homes and that capital gains up to Rs 2 crore can be used to buy two houses, ...

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Mass PRIM to ramp up direct real estate investments in 2019 IPE Real AssetsMassachusetts Pension Reserves Investment Management Board (Mass PRIM) could triple the size of its internally-managed direct property portfolio to $1bn ...

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FM’s booster dose for real estate Fortune IndiaThe announcement of credit linked subsidy scheme and increased tax savings will drive the demand for affordable housing.

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Repo rate cut to lower homebuyers’ mortgage, developers' working capital cost Moneycontrol.comFor a sector that received a Budget bonanza last week, the Reserve Bank of India's decision to reduce the repo rate by 25 bps to 6.25 percent is good news for ...

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Google will spend $13 billion on U.S. real estate in 2019, expanding into Nevada, Ohio, Texas and Nebraska CNBCGoogle will expand into Nevada, Ohio, Texas and Nebraska for the first time, adding new data centers in those states and offices elsewhere.

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NYC hedge-fund managers and Silicon Valley CEOs are flocking to Miami as 'tax refugees,' and it's sparking record, ultra-luxury real-estate sales in the area Business InsiderTech CEOs and hedge-fund managers are fleeing to Miami, where a top broker is seeing 'record sales' of multimillion-dollar, ultra-luxury homes.

All Things Real Estate: Read up on landlord/tenant law before buying duplex Fairfield Daily RepublicQ: I have an odd question. I'm only 21 years old and am going to Solano College. I've been paying rent for a small apartment for two years now and I've been ...

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Speed up Record of Rights appeals, real estate developers to Gujarat government Daily News & AnalysisQuicker disposal of land related Record of Rights (RTS) appeals is among the host of revenue reforms real estate developers want the state government to ...

Get Ready for a Real Estate Rumble and a Border Wall The National Interest OnlineThis is the creative real estate deal that will fund Trump's beautiful border wall.

LA real estate market may be shifting toward buyers Curbed LAIs Los Angeles turning into a buyer's market? With typical home prices eight times higher than the median income, that might be a stretch—but two new reports ...

Long Term Capital Gain on real estate: How to manage profit on house property income Zee BusinessIn India, a lot of people invest in real estate as it is expected to give a good return in small time. But, while investing they must know about the Long Term Capital ...

What This Millennial Real Estate Investor Did With $4,000 Changed His Life ForbesFind out how the advice and tips this millennial real estate investor has for others who wants to make millions as an investor.

Real estate options: Where should you invest in 2019? Moneycontrol.comFrom warehousing, co-working to co-living, there are a plethora of options that offer healthy returns.

Slowdown in housing market continued in January: B.C. Real Estate Association Global NewsTotal sales volume was $2.36 billion, a 38.4 per cent decline from the same month last year, according to the Association.

Tribunal to check real estate fraud The New Indian ExpressTo protect people from falling prey to real estate fraud, Odisha Government has established an appellate Tribunal - Odisha Real Estate Appellate Tribunal.

Real-estate developers relieved over 2-year tax exemption on notional rent on unsold homes The New Indian ExpressDevelopers and consultants feel that the proposal would benefit developers of 7-8 major cities especially Delhi and Mumbai.

2019 would be a great year for real estate sector: Irfan Razack, Prestige Estates Economic TimesWe will reach the Rs 3500-4000 crore guidance for 2019 and maybe exceed it, says Razack.

Top D-FW commercial real estate transactions for week of Feb. 15 include Greystone, Greysteel, JLL Dallas NewsChicago-based investor Pearlmark has purchased Pleasant Creek, a 159-unit apartment property located on Pleasant Run Road in Lancaster. The apartment ...

Florida is drowning. Condos are still being built. Can't humans see the writing on the wall? The GuardianPeople tend to respond to immediate threats and financial consequences – and Florida's coastal real estate may be on the cusp of delivering that harsh wake-up ...

We want to change the way real estate wealth is managed: Shivam Sinha, founder Indiassetz Economic Times"Indiassetz Infra Services is a “Family Office for Real Estate Wealth Management”. We manage real estate wealth of high net worth families and NRIs," Sinha ...

Booby-trapped house stuns Philadelphia real estate investor — VIDEO Las Vegas Review-JournalA Philadelphia real estate investor says a home he was scoping out came with an unadvertised surprise — a stairway booby-trapped with a swinging knife.

Top 5 least affordable cities for real estate World FinanceJust as property markets reached a peak around 2009, a global recession hit. This was followed by years of quantitative easing and artificially low interest rates.

Share market update: Realty shares slip; Indiabulls Real Estate falls over 5% Economic TimesThe Nifty Realty index was trading 0.67 per cent down at 222.45 around 12:00 pm.

Market transparency key to stable real estate development #AsiaNewsNetwork Eleven Myanmar(Viet Nam News/ANN) - Experts have said improving the transparency of the real estate market is critical to prevent inflated prices and ensure stable ...

Budget 2019: Sops for farmers, middle class, real estate Economic TimesFinance Minister Piyush Goyal showered tax sops for the middle class and announced an annual income support of Rs 6000 for small farmers as he presented a ...

Commercial real estate transactions from The Oklahoman for Saturday, Feb. 16, 2019 NewsOK.comPrice Edwards & Co. reports these real estate transactions: • El Rancho Niejo, LLC paid $267500 to Miles Thomas Millwork Inc. for 3.33 acre at 11035 NE 23, ...

Ask hard questions early to detect fraud in real estate The StandardThis is one rule phony real estate 'investment' companies have mastered in their journey of conning unsuspecting Kenyans.

How LTCG tax is charged on real estate and equity investments LivemintAny gains that you make from the transfer of these capital assets are known as capital gains and attract income taxThe tax liability depends on the assets and the ...

Rochester real estate market has calmed, but remains tight PostBulletin.comReal estate in Southern Minnesota took a wild ride in 2018, with a hot start followed by some cooling by year's end.

NBCC asked to provide estimate, amount required to complete delayed realty projects: Sources Moneycontrol.comThe National Housing Bank and some PSU banks may come forward to provide last mile funding to complete the unfinished projects.

Real estate exhibition Fairpro 2019 set to attract over 25000 visitors The New Indian ExpressThe expo is the annual flagship property and real-estate exhibition of Chennai Chapter of Confederation of Real Estate Developers' Associations of India.

ICRA maintains negative outlook for residential real estate, stable outlook for commercial realty Moneycontrol.comElections in 2019 may keep *fresh* project launches in check considering the uncertainties developers may face relating to timeliness of regulatory approvals for ...

Who will pay the MOST for your commercial real estate? OCRegisterGenerally, as a seller of commercial real estate, you have three motivations — transact as quickly as possible at the highest price with the fewest conditions.

What Amazon's Abandoned HQ2 Plan Means for NYC Real Estate BloombergAmazon.com Inc. said it's pulling out of a plan to build a headquarters in New York City, after a backlash from some residents and politicians. Bloomberg's ...

The Best Emerging Real Estate Markets In Europe For 2019 ForbesAs Europe watches the clock tick down to Brexit in a mere six weeks time, all eyes are on the property markets in the major European cities. With companies ...

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