Everyday you probably hear about the upcoming Real Estate bubble. You may ask yourself, What is it? And how is it going to affect me? The Real Estate bubble is a way of saying that home prices are climbing rapidly. The bubble could affect you in many ways. Homes may become unaffordable for middle income and lower income families. Rising prices can mean increased property taxes. The biggest threat is if the real estate bubble is busted which means home prices will fall rapidly leaving many homeowners upside down on their mortgages and having to take a loss to sell their homes.

Many in the media seem to be calling the current market a housing bubble due to the very rapid property value increases over the last 5-7 years. While every market in the United States is unique, most areas are still seeing property appreciation of 3-5% per year. However it is true that appreciation today is much slower than the past few years, where record increases have been the norm.

Real estate is a local industry. While there may be some areas of the country that are severely over-valued don't rush to the judgment that your home town over-valued as well. A good Realtor can obtain market statistics to help you decide if your area's appreciation rate is average, hot, or ready to burst.

As with any investment there is no way to predict what will happen in the future for the real estate market. However home prices are at the highest they have been in years. Many people regard the equity in their home as a form of savings. If there is a bubble and home prices do decrease you could loose that savings. Many borrowers are taking advantage of the situation and refinancing or getting second mortgages to access that equity while it is there.

 

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