Boom and Bust of Real Estate Industry in United States

Boom and Bust of Real Estate Industry in United States

by Melanie Bremner

Real Estate Boom in US

US Real Estate industry has seen drastic changes in last few years. During early years of this decade, United State's economy was booming like anything. Thanks to the IT, Electronics and Retail revolution that caused sudden increase in earning potential of residents. People were looking for new and more beneficial options to invest their money. Investing in Gold and commodities shares was not as rewarding as past. Share Prices of IT and Telecom companies were on its peak, so it was also not a good idea to buy them as investment purpose.

At this point of time, Real Estate became hot favorite for investment purposes. People started buying residential as well as commercial properties like there is no tomorrow. It was one of the most rewarding investments, which could return attractive benefits in comparatively less time.

Rule of Demand & Supply

There was one more reason behind this boom. It was the urbanization in almost every part of US. People were moving to cities and metros in search of better options of employment and better earning. It was a phenomenon, started during early eighties and reached to its climax during last few years of 20th century. As space were limited in metros, so according to the very old Demand and Supply rule of Economics, prices for residential as well as commercial properties started increasing and reached to all time high. However, people were busy buying properties, getting loans was easier due to flexible loan scheme offered by banks and lenders. Therefore, it was a rave of buying residential as well as commercial properties everywhere, what people were concerned is only EMI's of the loan amount.

Problem Days for Real Estate

It was the time when there were less available properties than the number of buyers. It was a win-win situation for sellers. They took benefit of the situation and sold properties on more than its actual prices. But, during last few years US has seen several problems falling dollar rates, increasing rate of unemployment, closure of several business entities, as well as bad health of sectors like IT and falling share prices resulted in hue and cry everywhere in US.

Banks increased rate of interest in this situation to recover their debt as soon s possible, however it became tough for people (who were facing several problems already) to pay their loan installments. They are left with burden of un payable loans, and the only option was to sell the property and pay the loan. However, it was also tough because they were not getting the perfect amount that can solve their problems. In fact, the price being offered used to be very less than the price paid by them when buying property. It created a major problem for Real Estate industry.