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Everyone these days is talking about the real estate bubble and the coming slow down of the real estate market. Afterall the price of homes can only go so high before any of us will be able to afford to buy a home. With interest rates being low, buying that dream home has been in reach for most families. But high interest rates combined with high prices spells disaster. The question is how long can interest rates stay low?
While the rising price of real estate has not hurt the homeowner much, it has made it more difficult for someone who is a first time home buyer. Remember they didn't benefit from the equity the rest of us homeowners gained. So how would someone start out buying a home these days if the interest rates increased? They most likely wouldn't be able to. So with the price of homes continuing to rise, although perhaps slowing down a bit, interest rates have to stay low. The bubble will simply burst when interest rates head back to the 8 range, then perhaps we'll see an adjustment.
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