Many of us are all too familiar with housing market crashes, but what about recoveries? One important aspect to familiarize yourself with in order to better understand the ups and downs of the housing market is the housing cycle. As demand goes up, prices and interest rates rise as well, making houses less affordable. The ensuing lack of buyers then forces demand down, and soon following is a dramatic price fall and interest rate decline, making houses affordable once more. This real estate supply and demand cycle makes both a buyer’s market as well as a seller’s market.
A real estate bust is known as a buyer’s market, where falling prices and slower sales yield financing and affordability constraints, short sales, and foreclosures. A real estate boom, or a seller’s market, is one wherein rising prices and multiple offers equal fast sales, easy financing and a rapid expansion in home building in order to meet demands. This supply and demand cycle can then turn into what is known as a bubble, when rising prices encourage further demand-up until the bubble bursts, and people scramble to sell. Prices then plummet downwards, sometimes even well below their value.
If that sounds familiar, it’s because we hit a peak of bubble years between 2005 and 2006, which later contributed to the Great Recession. The real question is, are we treading along bubble grounds today? Fortunately, no, even with some increases, home prices are still relatively low compared to fundamental home values, and far below bubble levels. For more information, refer to our helpful and informative infographic, and click for more information on tenant screenings or residential leases.
|<img src="https:/media/articles/322/HousingRecoveryInfographic(small)2.jpg" /> <br /><a href="https://www.ezlandlordforms.com/articles/a/322/blueprint_for_a_real_estate_recovery__infographic_/" title="Helpful Tips In A Real Estate Recovering Market" width="550"> Real Estate Market Recovery Blueprints</a>|