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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: TheStockFairy who wrote (956)	10/26/2001 7:30:08 PM
From: Tradelite	Read Replies (1) \| Respond to of 306849

If you read my previous, very recent, posts about real estate in Houston and the situation that existed nationally in the late 1980s, I defined bubbles as real estate purchases and sales as being built on nothing more than SPECULATION. If you need it spelled out further, then think like this: I'm buying this property for the sole purpose and hope of selling it to someone else very soon for much more money than I paid. That is speculation. It certainly exists in the stock market, doesn't it? And eventually it gets out of hand. However, what we have seen in the real estate market in the U.S. over the past few years has been much more basic: lots of people needing and wanting homes and not enough homes for sale. Therefore, home prices have risen. THAT IS NOT SPECULATION. That is simply the natural result of supply vs. demand. Where I live, home builders can't build all the homes they want to build, because there isn't enough land left where people really want to live, plus local regulatory authorities are putting a stop to unfettered growth. This makes prices for existing homes go nowhere but higher, eventually. If supply increases and demand falls, prices will fall. But that does not mean any speculative bubble existed over the past few years to drive the prices higher.