Is the real estate bubble about to burst?

Dien,

In my opinion one should not be too worried about what the Economist has to say. I mean did the Economist actually predict the dot com burst or before that the dot com rise?

When I say predict I mean express an opinion long before there was any evidence of its truth.

The real estate rise is not comparative to the dot com rise. The dot com "bubble" was based on a addictive assumption of future profits that led to manic demand.

Real estate interest rates are greatly related to at least in the US to treasury bonds. Very stable.

People are not buying houses or refinancing based on future expectations of lower rates. People are buying and refinancing because rates are low right NOW. They receive an immediate benefit.

If rates rise then yes things might slow down but that is the normal ups and down of any normal market. A normal market is one based on real demand. Real demand is based on a benefit received at the moment of it's transaction. Economist call it Present Value theory.

A bubble and its subsequent burst are based on an artifical rise in demand then a huge correction back to reality.




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