Managing the Effects of a Real Estate Hangover
by Stefan Swanepoel
We all know that 2000 - 2005 comprised one of the hottest real estate markets on record in which the industry enjoyed tremendous growth. But are there any consequences to the industry?
“Definitely” says Stefan Swanepoel, author the annual Swanepoel Trends Report in his latest 2007 edition. “During this period of growth the country experienced a buying frenzy fed by low interest rates, a plate full of new mortgages, bullish customer confidence, low unemployment, strong economic growth and excellent price appreciation. Many economic factors were required to be in place for the prolonged real estate boom,” Swanepoel says. “The consumers’ hunger seemed to have no end but it took more than just an appetite for bigger and better to fuel such a run in real estate”.
According to many sources outside the real estate industry, this market is destined to have its bubble burst with higher mortgage rates, a downturn in home sales, an increased inventory of unsold homes and an economy headed for a recession. Industry insiders, however, paint a much different picture based upon: strong employment; an artificially high demand for home buying that has dissipated; the balancing out of homes purchased by investors for rapid appreciation being put back on the market; lower interest rates; and a strong economy.
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