The Great Real Estate Bubble Quiz
By Mark Walters
You hear it asked on the radio, in
the newspapers and on TV.
"Are we experiencing a value bubble in real estate and is
it
ready 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
face="Verdana, Arial, Helvetica, sans-serif">.
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 million
dollar 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
|
