The real estate market has seen an exponential high in the past few years. This rise has led many people to invest in the real estate market but now the market pundits are saying that such a high rise in investments has now lead to such an increase in the prices of real estate that it has now become unaffordable to many people and thus the market has now become so unpredictable that it can collapse anytime.
A west Vancouver realtor claims that this kind of appreciation may not lead to an immediate crash as there is no national real estate market and all the statistics are local which are put together for national data so any boom will always relate to local real estate market which differs from area to area.
Increase in Interest Rate
One of the main reasons everyone is saying that the real estate boom will end is due to the increase in interest rates. The gradual increase in interest rate will not hurt the real estate market on the contrary the increase in interest rate helps the market as the boom or bubble in the market happens when there is speculation which in turn increases the price of the property. After a period of time the prices increase to such an extent due to the speculation that the buyer stops buying property either due to non availability of funds or he does not want to buy property anymore as it is very highly priced. Thus the market comes crashing down, but then the interest rates are increased to give a cooling period for the prices and wages to catch up.
In the end it is very safe to say that the real estate boom is here to stay, there may be some reduction in the prices and it may continue for some time but that is only due to the market taking a break and this may also bring the markets to the level of the buyer to buy and continue to exist as such. The boom in real estate is here for some time and if negative external factors such as war, pan endemics, terrorist attacks which affect the entire economy continue, they may be influential but until then the local factors are of more importance. The buyers’ confidence in real estate market as a sound investment to get returns on money invested is the mainstay of the real estate market boom.