Is There a Real Estate Bubble?
Currently, there doesn’t seem to be a real estate bubble. Speculation of an interest rate hike has been halted yet again during a press conference earlier this week with Fed Chair Janet Yellen. The Fed continues to push forward their agenda to not raise interest rates due to the volatility of the recovering economy. According to Yellen, there is a possibility of a slight interest rate increase later this year. The interest rates will increase at a constant pace in the coming years.
With interest rates remaining low, it looks like the real estate market will continue growing for at least the next 18 months. This will drive real estate to peak prices.
Even at such high prices, many investors are taking advantage of the low interest rates and jumping into the rental market. Since the current housing prices are so high, many people are opting to rent instead, paying record high rental prices for convenience and amenities. Currently, there are not enough housing to accommodate people in the Los Angeles area. Thus, rental rates are soaring. Investors are capitalizing on the low interest rates and housing shortages to make a profit in the current economy.
Looking at the low interest rates, increased prices and high demand for rentals, it doesn’t look like the current real estate market is slowing down any time soon.
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