I am of the opinion that everyone and their mother should be extra cautious when dabbling in real estate these days. Look around, and it’s clear we’ve been here before. And the results weren’t pretty the first time.
For starters, the market is clearly kicking into a higher gear. Yes, the U.S. housing sector has been hacking up a lung, ala Breaking Bad’s Walt White, for the better part of six years, with many communities still reporting rising foreclosures and tumbling prices through the end of the third quarter. But hidden beneath this stubborn and ominous cloud are a handful of silver linings that have steadily brightened over the past 18 months.
One might even go so far as to call this trend the early stages of, dare I say, a modest housing bubble. It’s a bubble that is unlikely to inflate to the levels last seen in 2005 and 2006, but one that is still fully capable of sucking the life out of the party, so to speak, once it pops.
For one, rents are strong and continue to climb, giving investors a solid reason to get off the sidelines. Second, home prices are well down from their previous-bubble high, offering first-time buyers a healthy incentive to give it a go. Last, and perhaps most importantly, money is loose; ...