Talk of housing bubble overstated. Home sales remain steady,

With all the talk recently of a housing bubble, what can home owners expect in the months ahead? Comparisons to bubbles in other industries fail to take into account several salient factors with regard to real estate.

For instance, the tech bubble of the 1990s saw stocks in that industry tumble nearly 80%. Can we really think that the same kind of correction could take place in the real estate market?

Real estate differs from other assets in many important ways and is affected on a regional basis more often than a national one. A correction in one area of the country doesn’t necessarily spell a nationwide housing price drop. While it has become much more difficult to buy a home in many cities, in others it has actually become easier, pointing to a boom taking place regionally, rather nationally.

In comparison to stocks or bonds, homes are largely illiquid assets that can take a significant amount of time to sell as compared to stocks which are negotiable securities. Different factors drive housing prices such as mortgage interest rates, the local economy and housing supply and demand.

The United States leads the world in population growth. Not suprisingly, this increasing population needs housing. Children of the baby boom are now reaching home buying age.

It may be that housing prices are due for a correction, a slow down is likely, but home sales should remain steady and will regain momentum throughout the next decade.

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