There are a few small markets in the U.S. that are actually having an upward trend in real estate until too many people find out about it and inflation sets in and people ditch that market.
non of that makes sense -- at least not the way you combine those two things.
Consider why the housing market bubble burst?
lenders were offering loans (with very low introductory interest rates that would then subsequently shoot up (a recent Capital One credit card commercial does a great job at giving a visual of that). They were offering 0% down. And worst of all, they were approving just about anyone.
When the introductory rates shot up, people were unable to make interest payments, so they defaulted on their loans, and the bank foreclosed (took over the ownership - in simplest terms).
This happens all the time, many people have made fortunes on these properties in the past because they bank puts them up for sale at a price where it can cover it's own loans.
( a little lesson on the banking system - when you deposit your money into an account, that money doesn't just sit in the vault. It is used by the bank to make loans to other people. for the use of this money the bank pays you some small percentage - anywhere from 0.25% per year, to 4.5% or 5.5% per year depending on the prevailing interest rates. But rather then taking on all the risk of loaning out $100,000, at say 7% for 25 years ... the bank will take that mortgage, split it up into several smaller bond issues, and sell them in the market place, so now, the risk is divided by other investors -- usually the bonds will pay close the equivalent term rates of gov bonds, since banks are usually considered very stable.)
so since the bank has it's own loans to pay it needs to liquidate that asset quickly. Like i said, this usually happens all the time, it's a risk banks take on.
enter 2007 mortgage crisis -- instead of 1 or 2 houses foreclosing, 10 -20 houses start foreclosing - the bank has to cover it's costs so it lowers the price of the houses
you now have a surplus of homes --- people interested in purchasing on the cheap all of a sudden get to be picky - people in the area looking to sell their home are now forced to lower their price to make it more attractive to sell -- and so this cycle continues until finally those willing to buy and those willing to sell agree in a price where the quantity demanded and quantity supplied meet -- known as equilibrium
Yet, you are observing that some places are experiencing increase in value.
perhaps it is an attractive area that people want to move to because that's where the jobs are - Texas is experiencing an economic boom thanks to gas prices.
OR perhaps the prices had come down so low in the market, that people are now trying to buy on the cheap, and now that there are so many buyers, prices can start increasing again, obviously they will not increase forever because just like pricing coming down, eventually quantity supplied will meet quantity demanded. Often a rapid rise in prices, a bubble, is caused by rampant optimism and speculation, people buying homes with the intention of reselling immediately at a higher price.
Another factor to consider in the housing market was the growth of "flipping" craze -- this in particular was fueled by the 0 down, low introductory rates --- people were often buying homes that were far to expensive, so they can flip them within the month (to avoid the large mortgage payment). when the bubble burst, and all those people holding on to homes starting dumping them trying to get out, there was as further depression in the value of the homes.
now, inflation is an economic wide phenomenon ... as measured by CPI or GDP deflator -- rising rent or value of new homes contributes to the entire calculation of inflation ... but the rise in home values is not inflation -- more accurately one would say that home values are rising slower then inflation, at the rate of inflation, or faster then inflation.
now consider the price of gas.
gasoline is dependent on the price of oil.
2 reasons for the increase in the price oil
1. increased in demand, and lowered supply -- thats a market mechanism -- add to that speculation, and you fuel a bubble
2. depreciating US currency --- since oil is sold is traded in US dollars, the lower value of US dollars means more of them are needed when trading with other countries --- you'll notice the negative correlation between them -- they are not perfectly correlated because of point 1 -- but pretty damn close.
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