What does real estate bubble mean?
Bubble, bubble, bubble. The Internet bubble has burned 'bubble' into the minds of many Americans, and all investors. As real estate has become an exceedingly popular investment tool and stock money has been diverted into real estate, so to has the word bubble become exceedingly popular as a description of real estate.
The Internet bubble was built on irrational exuberance, many analysts have stated. Companies with little more than a business plan were suddenly receiving millions of dollars in funding to be the first to market, yet the market wasn't big enough for everyone trying to get there.
While the housing market, or the real estate market in general, is showing signs of exuberance, is it completely irrational?
Homes and real estate have value, it's not about being first to market. Real estate has long term value as an asset. A bankrupt company built mostly on paper with few tangible assets, doesn't have much long term value.
Home values in Los Angeles have risen more than 50% in just the last two years, and much of California has seen the same. Analysts throughout the country call this the great California real estate bubble.
Yet, if one studies population trends, California is certain to become more populated. More important, expansion is nearing its limits - at least outward expansion. Instead, much like other major metropolitan areas, California will have to build upward - something that really hasn't been done, particularly in Southern California.
Thus, ultimately, real estate should have much better long term investment value than Internet bubble casualties. When push comes to shove, the Internet is an apple, while real estate is an orange.
There is a lot of exuberance in the real estate market, but it is far less irrational than the Internet bubble.
The Internet bubble was built on irrational exuberance, many analysts have stated. Companies with little more than a business plan were suddenly receiving millions of dollars in funding to be the first to market, yet the market wasn't big enough for everyone trying to get there.
While the housing market, or the real estate market in general, is showing signs of exuberance, is it completely irrational?
Homes and real estate have value, it's not about being first to market. Real estate has long term value as an asset. A bankrupt company built mostly on paper with few tangible assets, doesn't have much long term value.
Home values in Los Angeles have risen more than 50% in just the last two years, and much of California has seen the same. Analysts throughout the country call this the great California real estate bubble.
Yet, if one studies population trends, California is certain to become more populated. More important, expansion is nearing its limits - at least outward expansion. Instead, much like other major metropolitan areas, California will have to build upward - something that really hasn't been done, particularly in Southern California.
Thus, ultimately, real estate should have much better long term investment value than Internet bubble casualties. When push comes to shove, the Internet is an apple, while real estate is an orange.
There is a lot of exuberance in the real estate market, but it is far less irrational than the Internet bubble.
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