Housing Bubble Burst discourages to invest

November 05, 2013  //  Posted by: cooldude  //  Category: Property Investments

real estate investmentInvesting is real estate is a much safer option than any other investment plans. It has a good rate of return and can be liquidated within a shorter span of time than in government or private bonds or stocks. With early withdrawal of money, the penalties imposed on real estate investment are not very high or stiff. It does not involve the loss of a large sum of money. Under normal circumstances a real estate appreciates by 4% per annum which means that within a span of 5 years the value of your real estate investment can go up by 20%. By remodeling your house slightly you can see that the value or returns from it will be higher.

With a wide variety of investment, real estate investment pays off well. Due to the limited supply of houses in the short span of time, as houses cannot be built overnight, and sufficiently large demand from the people housing can be quite valuable. People are still looking for safe places to live in at an affordable range, which further pushes up the price of housing.

Last five years has witnessed a huge jump in the real estate market which caused more and more people to invest in it. But it is no longer safe to invest in the real estate market any longer. Due to the housing bubble burst in US during 2007-10, the demand for housing is going on falling as people are now afraid to invest in it. Higher interest rates and higher prices make owning of a house even more expensive for new homebuyers. Due to excessive demand the inventories that were built during the time when the real estate bubble was built i.e. the boom time, are now left idle which causes the prices to rise further. Therefore even though the supply is more or less stable now, there is very low demand.

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