The Real Estate Bubble Is Bursting

The past five years have seen tremendous growth in the real estate market, and as a result many people believe that real estate is the safest investment you can make. Well, this is no longer true. Have caused a rapid increase in real estate prices in the real estate market to be at price levels unprecedented in history when inflation is taken into account! A growing number of people concerned about the real estate bubble means that there is less available real estate buyers. Fewer buyers mean that prices are coming down.

The first reason that the real estate bubble is bursting and rising interest rates. Under Alan Greenspan, interest rates were at historic lows from June 2003 to June 2004. Allowed for these low interest rates people to buy houses that were more expensive then what can normally afford but at the same monthly cost, creating essentially "free money". However, the time of low interest rates has ended, and that interest rates were rising and will continue to rise further. Should increase interest rates to fight inflation, partly due to high gasoline and food costs. High interest rates make owning a home more expensive, pushing the value of the bottom of the housing.

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