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 Tuesday, March 26 2019 @ 01:53 AM UTC

Real Estate Bubble Explained by Economist

General NewsThe term real estate bubble, it is widely known to articles describing the theory of real estate prices going up or rising. Mark Eppli, finance at Marquette University, says that the consumers shouldn't worry.

He said "I have no problem saying that there is not a real estate bubble. By looking at the short-term, medium-tern and long-term, I think the market isn't going to have a fall out," he adds "I look at the numbers and that's where I get my evidence from,"

In the short-term, interest rates may go up a bit, but they are still historically low and in the mid-term, solid employment growth is the key to growing the real estate market, that what the numbers are telling Eppli.

He said "There is solid demographic growth that is generating new households. Young adults, minorities and unmarried women will drive the housing market," Most importantly, when looking long-term, demographics rule.

House prices adjusted for inflation and size were below the 28-year median in 2004, that is what the long-term picture looks like.

Eppli said "Houses may cost more today, but you're getting more for that money," he adds "When you adjust the price due to inflation and house size, the prices are below the 30-year average,"

Eppli says while the real estate bubble isn't about to burst, not all is perfect when it comes to the housing market, he said that new homes were overbuilt so the supply right now outstrips the demand, but quickly added "I think that will work itself out. I know there's a lot of concern about it, but it's not something that is going to break the market." He believes talk about a housing bubble generates lots of press because for many people, their home is their No. 1 investment vehicle.

Eppli said "Our homes are our largest store of wealth and they are also our ATMs if you have a home equity line in place, and lastly added "And if your home value goes up, you feel that immediately. Studies show that when someone's home goes up in value, they spend more. It just makes you feel more wealthy."

Dealing that the real estate boom really affects most people who make a living at the real estate market. It's no surprise that the boom will gradually affect most of the investors involve in its market.

By: Dijon Wainwright

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