The Great Real Estate Bubble Quiz
You hear it asked on the radio, in the newspapers and on TV."Are we experiencing a value bubble in real estate and is itready to burst?"Do you have an answer for that question?
Do you have a
guess?
Yes, I know the so called experts are lining up on both
sides of the question.
But what about you?
You're living
right in the middle of the action.
You can judge what's
happening in your city - your neighborhood.
Are property owners going to be safe or sorry?
To help you form an opinion of the current state of the
real estate market we have created the...
GREAT REAL ESTATE BUBBLE QUIZ...
Everyone gets a passing grade and no homework is required,
so put your thinking cap on and jump in...
True False Question___ ___ Boston Real Estate values are up 90% in the last six years?___ ___ San Francisco real estate values are up 90% in the last six years?___ ___ Denver real estate values are up 90% in the last six years?___ ___ The price of the average home in New York was $50,000 in 1975 and is $325,000 today..a gain of 550%?___ ___ The average home price in Los Angeles was $50,000 in 1975.
After a gain of 500% it sells today for $300,000?___ ___ A 6,000 sq ft home in Greenwich, CT. worth $500,000 in 1987 sells today for $4-million?___ ___ Fannie Mae, the largest buyer of mortgages in the US, issued a report warning that the probability of a housing bust has risen sharply in certain parts of the country.
I bet you scored 100% and earned your "Doctorate of
Bubblology".
OK, why is Fannie Mae so glum?
They point to loose (We
would say CRAZY) lending practices, like interest only
loans and the increase in loan approvals that are not
backed by full documentation of the borrower's income and
assets.
We imagine a borrower's conversation with a lender today
goes something like this:
Borrower:
"Will you give me a quarter of a milliondollar mortgage loan."
Lender:
"Can you pay it back?"
Borrower:
"Probably."
Lender:
"Loan approved!"Now you may be thinking that skyrocketing values are
in an isolated number of big cities, right?
That's
true, but those cities are our major commerce centers.
When things go bad there the negative effect ripples
across the country.
Here's the bottom line:
Our economy is always blowing
bubbles.
Some burst and some don't.
Only time will tell about this one.
Mark Walters is an investor-entrepreneur helping other
investors from his Web pages at
http://www.
Lease-Option-Sub2.com
Mark Walters
