investing in real estate

Why the Current Housing Market Is Not a Bubble the Way 2006 Was

Rising Real Estate Prices: To Invest Or Not To Invest?

Many of us are still scarred from the crash of the 2004 to 2006 years when property prices crashed after being artificially inflated. Today, when we see property prices rising again, the specter of that crash looms in our collective memories. We had seen a lot of people hurt at the time and wonder if the current housing market is a bubble as well – with a similar crash in store. However, as an investor then and an investor now, I can tell you that the circumstances are very different today. Here’s why the current housing market is not a bubble…

The crash of 2006.

If you recall, during 2004 to 2006, practically anyone qualified for a loan. The lending standards were so low that there were practically no barriers to getting loans. People without good credit were getting loans without proper disclosures or surety.  Loans were being issued for 100% and at times 125% of the property value. In my experience, there were people working at McDonald’s, who were going out and buying seven homes!
This situation was just not sustainable. People without the wherewithal to repay were getting loans without necessary checks, with the result that the proportion of bad loans was very high at the time. Too many people were simply not able to repay. This was a bubble in the real sense of the word, and a bubble that everyone could see was going to burst before long. It did burst, and a lot of people got hurt.

Why things are different in 2021-22.

Right now, we see real estate prices rising once again and a lot of people come to me expressing concern about another possible crash. However, there are many ways in which the situation is very different today. One very significant change has been the way people are choosing to live now in the pandemic world. People prefer single family homes; standalone houses rather than apartments with lifts and shared surfaces, thus pushing up the demand for them. They prefer to have space to call their own; maybe an extra room or two for those work-from-home gigs.
Secondly, it is a lot more difficult to get a loan today, thanks to a changed market reality, the Frank Dodd rules and for other reasons. 
These, and many other reasons, are pushing property prices upwards right now. I talk about them in my latest episode. Watch the video or listen to the podcast for more on why I say that the current housing market is not a bubble that is going to burst.  

Is It Safe To Invest In Real Estate Online? Why Or Why Not?

Investing Online In Real Estate? How To Do It Right
In this constantly-connected world, it makes sense to invest online. We have at our fingertips all the information we need, the ability to communicate instantly, have queries answered, tour properties virtually and more. So, investing online in real estate does seem to make a lot of sense, especially in these times of COVID when people are still reluctant to travel. It is only obvious that our clients and people who attend our seminars often have this question for me: can I invest in real estate online? My answer is, yes and no.

Investing in real estate online is a good idea.

You have access to thousands of options – you can see images, watch videos, take virtual tours to see what it is like indoors and outdoors to get a real sense of a property. You can exchange emails to have all your queries answered. You can read reviews of brokers or property developers or managers, and even check what people say about them on social media. You can read up on all the news and market analysis for the region you’re interested in investing in.
All this is possible online and one must take advantage of the speed and convenience and economy of this. One would be unwise not to! However, the rule of thumb here is that it is a good idea to go and physically visit the market one wants to invest in. This gives you a sense of the sort of neighborhood, the area, the property and so on.  

My advice for investing in real estate online.

Even if it’s only a short visit, just one day to drive around the area and personally meet some of the people involved, an actual visit to the market is a good idea. You can speak to the property manager, take some pictures on your own and get a much better sense of the decision you’re about to take. In the end this is going to give you a great sense of confidence about your investment. Plus this is going to be important for when the nay-sayers among your friends and family have questions about your decision!
Check out this episode to know my views on whether you should invest in real estate online. Reach out to us at ICG Real Estate to know about our properties or to book an appointment.