Will The Real Estate Bubble Crush Anytime Soon?
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·5 min read

The real estate market has been booming for the past year, especially in South Florida, Miami (the hottest real estate markets in the world).We have seen many houses on the market and many more buyers willing to pay more for any piece of real estate.The best real estate agent is being scouted with new deals every day, with multiple offers on the table, completing deals with competitive bidding wars, but will it ever come to an end?

We have seen big changes in the commercial and residential real estate sector. While residential housing was booming, commercial real estate was drowning by the day.Many stores were closed as a direct result of the pandemic. People were doing their daily shopping online and moreover also starting new jobs online. The good news is that people are looking for a home more than ever.

They want to live and work in the same place, taking care of their children, parents, etc.

"Commercial real estate will continue to decline in value for years to come, while residential will continue to rise" (Mr. Wonderful - from Shark Tank)

What is the history of the housing bubble so far in real estate and what direct factors are taken into account and which apply to 2021?

  • House prices (they are continually rising and adjusting for inflation) There have only been two housing bubbles in the last 100 years when the great depression occurred. One happened between 2000-2002 that burst in 2006-2007 and the second housing bubble is happening between 2012-2021
  • Interest rates (interest is artificially kept at an all-time low, which helps new homeowners, but how long will it last?
  • Income (Until now, we had a direct factor of unemployment and low or no income in the majority of the population, which raised the rate of inflation due to the unemployment benefits provided by the federal government.
  • Inventory (demand vs. supply determination of how many people want to buy and how much inventory is on the market. Most homeowners are not in a hurry to sell their property. Simply selling high will make them buy high property. brand new, which isn't a trigger point for most owners right now.

The indirect factors that contribute to the real estate market are:

  • Earnings and income, how many people are making money, and also don't have jobs to keep their income coming from?
  • How people feel about buying a property, are they sure of their feeling? People are not in a hurry to sell a property.
  • What is the state of inflation? It is the value of the dollar increases or decreases. To this day, the purchasing power of the dollar has been reduced due to the trillions of dollars released to the public as a factor in unemployment. the fact that we still have a high unemployment rate makes a big difference in the housing market.

Are we in a bubble right now and will it burst? Let's break down what is really happening with the market today:

  • Supply is more likely to stay low
  • The interest will be low for a longer period of time.
  • Real estate demand will be high and prices in most markets will continue to rise. If people are still unemployed, demand will fall and then the bubble may burst.
  • We are seeing mass moves and vacancies from major cities like New York, Chicago, Los Angeles where people are moving to other states with lower cost of living, lower tax rates and bigger and better homes to live in.
  • We're looking at inflation (gas prices are up, store prices are up, and that tells us that the dollar has lost a lot of value due to the stimulus packages that were released to the masses recently this year.
  • We are seeing landlords who have not collected their rent for the past year, but still had to pay building bills and taxes. Most of them don't know how to protect themselves or even how to apply for housing assistance. Therefore, these landlords are waiting in line for the eviction restriction to be lifted so they can get out of this unpleasant experience. They don't want to deal with this hassle anymore and this fear will make them sell their real estate portfolio, eventually.

"We are clearly in a bubble" (Kevin Ward - Yes Master, Real Estate Coach)

Every 5 years, there is a turnover in real estate. In 2008, for example, more than 400 real estate agents left the business because the bubble burst.

There may be 4 things that can happen in the next few years with the real estate market:"

  • House prices can continue to grow rapidly and explode in numbers.
  • Houses may go up a little more in price this year or go flat.
  • Houses can drop a little in price.
  • Houses can go down in price tremendously from a correction in the market” (Neil Mc-Coy Ward)


"As long as we still have a stimulus, we're not going to have a crash. As soon as the stimulus stops, we're going to see panic for a couple of months." (Neil McCoy Ward)

Panic could come anywhere. We are highly connected as social human beings and we intend to do, act and behave like our closest friend, neighbor or partner. If one starts to panic sell, another will start, and so on.

By that time, it will be too late because:

1. Interest rates will be much higher. (Mortgage interest rates specifically)

2. Inventory will reverse: we will have more inventory than demand and prices will drop significantly.


You could buy now, getting a 30-year fixed mortgage so the interest can't fluctuate despite any market (low or high), and planning not to move out of that property for the next 10-20 years. If it fails, you'll be fine, as the price is more likely to go back up.- or wait until you like it and buy then, if you are planning short-term investments. What if it's never a housing correction?

If you or someone you know wants to take advantage of the market today before it's too late, email Info@AngelaAndronache.com and let's find out your best options.


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