Back to Basics: The "B" Word - What is a Real Estate Bubble
Posted on Tuesday, November 25th, 2014 at 10:55am.
A real estate bubble or housing bubble is a type of economic bubble that occurs periodically in local or global real estate markets. It can be identified through rapid increases in cost of real property until they reach unsustainable levels and then decline. Most bubbles are fueled by speculation and characterized by easy credit, irrational exuberance and rapid rise in prices. Prices rise not because demand for housing is increasing, but because buyers believe prices will continue to rise in the near future.
For several years the Austin-area housing market has been active and there have been some folks suggesting that we have been experiencing a “Bubble” and that Austin is poised for a crash. But experts have explained that speculation is NOT what is driving the housing demand in Austin. Instead, Austin's housing demand is being driven by population growth. According to Austin City Demographer, there are 110 people moving to the Austin area everyday and our unemployment rate is below average. That means that our population is growing, which leads to an increasing demand for homes. As we know, prices rise with demand when supply is low, which explains the price increase for Austin homes. This market has created many opportunities for sellers listing attractive, well-priced properties due to high demand and a growing population. With the overwhelming popularity of our great city, we don't see this trend ending anytime soon.
We would love to provide you with more information about the right time to sell your home or answer any other questions you might have.
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