Real Estate Articles

The Federal Reserve under Ben Bernanke began aggressively lowering interest rates at the end of 2007 in response to the severe economic downturn caused by the collapse of house prices and the related difficulties falling house prices had on the banks and other institutions that made loans using houses as collateral. Many are concerned that these policies will ignite a period of hyperinflation in the United States.

One method used to evaluation residential real estate prices is the price-to-income ratio. Since people borrow the vast majority of the funds necessary to purchase residential real estate, and this borrowing must be financed from current income, the ratio of house prices to rent is a useful barometer of market valuation.

Lenders love the idea of FHA loans. The reasoning is simple. These loans have the backing of Federal Housing Administration. This means that in case of a payment ...

These are times of recession and it is expected that real estate will bear a major brunt of it. Having said this, few government initiatives at the right time can turn things under ...

Comparative rent is the primary method of evaluating the fundamental value of any property. The price-to-rent ratio links the cost of ownership with the cost of rental. This link is direct because possession of property can be obtained by either method. The cost of ownership encapsulates all of the financing terms and other variables associated with possession of real estate as does the cost of rental. Price-to-rent ratio fluctuates over time as changes in the cost of ownership and terms of financing makes financing amounts vary and house prices vary as well.

Most market participants focus on price action. The price-to-price feedback mechanism largely responsible for bubble market behavior gathers its strength from an awareness of market pricing, and the widespread belief that short-term, past price performance is predictive of long-term, future price performance. It is a fallacy that is often reinforced in the short-term as irrational exuberance takes over in a market, but over the long term, short-term price movements rarely correspond to long-term price trends, and when they do, it is only by chance.

Despite the difficulty in market forecasting, many who have examined the residential real estate market point to continued declines through 2009 and beyond. The most likely scenario has resale residential real estate markets bottoming in 2011 at prices 30% off the peak nationally.

Every homebuyer operating in the deflation of the Great Housing Bubble needs to consider what loan terms will be available in the future. At some point, most buyers become sellers. The future buyer will likely need to borrow most of the money necessary to complete a real estate transaction. The availability of credit and the loan terms this future buyer will face is the primary determinant of the price this buyer will pay for real estate.

Are you looking to purchase a piece of real estate? Whether you are purchasing residential, commercial, or investment properties, you can use the 3 steps outlined in this article to ensure that you get the property you need.

What is a Cultural Pathology? There are certain beliefs if widely held and acted upon by a group of people leads inevitably to collective suffering and personal destruction. The housing bubble was a form of cultural pathology. It spawned a number of beliefs and actions that caused people to lose their houses in foreclosure.