During September U.S. housing data surprised the market with a rise after strong rumors of slowdown in August when the median home price fell for the first time in 11 years .
Construction and Real Estate made their worst predictions: falling prices, slowdown and lower profits. Thus increasing the likelihood of the housing bubble burst.
Hence the surprise when the current data. Something similar happens in Spain awaited where the explosion would be slow in coming. Meanwhile, people trying to predict the future of the most unexpected. Where anything goes, so Google Trends , to avoid being at the epicenter when the bubble bursts and prices drop.
is that nobody wants to repeat the history of Tokyo where home prices fell steadily for 12 years or the Shanghai during January when the real estate agents were dropped by almost two thirds its revenue from sales commissions. Or what is beginning to happen now Sydney, where homes in some suburbs are suffering setbacks around 10%. Or, as one might expect to happen in India , which currently would be fully in rising prices.
Construction and Real Estate made their worst predictions: falling prices, slowdown and lower profits. Thus increasing the likelihood of the housing bubble burst.
Hence the surprise when the current data. Something similar happens in Spain awaited where the explosion would be slow in coming. Meanwhile, people trying to predict the future of the most unexpected. Where anything goes, so Google Trends , to avoid being at the epicenter when the bubble bursts and prices drop.
is that nobody wants to repeat the history of Tokyo where home prices fell steadily for 12 years or the Shanghai during January when the real estate agents were dropped by almost two thirds its revenue from sales commissions. Or what is beginning to happen now Sydney, where homes in some suburbs are suffering setbacks around 10%. Or, as one might expect to happen in India , which currently would be fully in rising prices.
Whatever the case, history has taught us that economic bubbles are distinguished when the puncture occurred, not before. Which accentuates more their painful effects, as explained Yoshihisa Nakashima: his department now worth half what it paid 14 years ago during the housing bubble that hit Tokyo in 1991.
The genesis of a phenomenon
A bubble rests at low interest rates, which provide access to cheap credit. Lured by such attractive rates, people enter the housing market energize the construction industry (which is known to have multiplier effect on the economy).
This leads to higher consumption multiplier effect soon shot raises fears of inflation, creating a state of alert in the economic authority. Remember that the best way to cool the consumer is to restrict the amount of money circulating, which is achieved with a higher cost of borrowing. Then the authority begins to raise interest rates.
What happens then?. In some cases, disastrous.
Existing home sales are stagnant, they begin to make sales and the owners note that the value of your home drops below the debt owed on that same property. As suddenly as they had arrived, capital go. Everyone is out of the market, while the ads "For Sale" begin populating the city and announced the outbreak of the Housing Bubble is felt.
I leave you a video I found on the Blog Salmon . This is a story developed by the U.S. chain ABC News easily explaining the phenomenon described. Indeed, although the sound is very bad, is subtitled.
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