Has real estate lost its “mojo”?
Anyone who has watched real estate has certainly noticed a large uptick in house prices from 2007, almost doubling in many areas. This begs the question: Are we approaching a bubble? Are we going to see a correction like 2007 or the 80’s?
Has the housing market entered a “danger zone”?
We’ve all seen the headlines from various publications claiming “the bubble will burst!”. To test this theory, we looked at Denver (see CO biz magazine article), one of the fastest appreciating markets and commonly cited as a premier candidate for a correction, to answer the following questions.
- What caused the last bubble?
- What has driven the large run up in real estate appreciation both in Denver and throughout the country?
- What will causes prices to deflate or “pop”
This begs the question: Is Residential Real Estate approaching a bubble? Are we going to see a correction like 2007 or the 80’s? Denver is a prime example of the recent extreme price appreciation of residential houses. According to a recent article in the Denver Post, Denver’s housing market has entered a danger zone and is one of three metro areas at risk for “a severe price decline”. Furthermore, a recent Wall Street Journal analysis highlighted Denver as one of three problem spots for overvaluation and at a high risk for a bubble.
First, what typically causes real estate appreciation? What caused the last residential real estate bubble to pop? What could cause the recent run up in prices to “deflate or pop” in Denver?
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, Illinois, and Florida. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all Fairview needs is their simple one page application (no upfront fees or other games).