New Bubble

[Tom Goans]

As an old pro with almost 50 years of personal experience and learned real estate investing and developing from my grandfather and father, I am of the opinion a new real estate and credit bubble is being created just like the one from which the market is trying to emerge.

In 2003, I noticed the real estate bubble being created by the then real estate agents and investment amateurs and predicted a major correction. Real estate agents laughed at the suggestion stating the market will only go up ...

The real estate market is once again flushed with amateurs pushing prices up and manufacturing demand. They are borrowing to their limits. This time, the federal government is part of the problem by manufacturing low interest rates and printing money. In addition, household and personal income has been on the decline for years and is not keeping up with inflation in major factors of the economy, such as groceries, health costs, insurance, taxes, etc.

Some of the old pros are already noticing a new real estate bubble being created on top of the existing one that is still settling. What are the REALISTIC chances another bubble will burst in a year or so?

Be careful investors. Learn from history or repeat it.

[Lynn McGeein]

Don't you think the current financing policies, much larger down payment requirements for investors, larger reserve requirements, strict documentation, along with a much larger percentage of all cash sales, will mitigate some of the risk you're seeing? People who invest a large percentage of their own money are much less likely to walk away than those people who used to get mortgages for 125% of appraised value back when you just needed a pulse to get a loan. I would be much more concerned if banks were once again lending to unqualified morons with 0-down and no-doc loans.