It's not a bubble. Real estate prices are accelerating because US Treasury Bond (aka t-bond) rates have been kept too low for too long, not because of speculation like it would be with a bubble. Allow me to explain :theory-gary:
Usually investors will "diversify their portfolios," which means make some risky investments with a potentially high payout and some safe investments with lower payouts. Traditionally, t-bonds filled the role of the safer investments, because the only way they don't pay out is if the US government defaults on its debt, which means that the entire world economy has probably collapsed and you have bigger fish to fry. The Obama administration lowered the bond rate to make them a less attractive investment so the money would circulate and stimulate the economy after the 08 crash, which tbh was probably necessary; the Trump administration kept it low because Trump is a big wet boy who wanted to win political points for having a bustling economy. This meant that investment firms were looking for somewhere else to park their money that was a relatively safe investment that would give better returns than a t-bond, and they settled on real estate. Something like 18% of all homes sold in the US in the last quarter of 2021 went to an investment firm.
It's not a bubble. Real estate prices are accelerating because US Treasury Bond (aka t-bond) rates have been kept too low for too long, not because of speculation like it would be with a bubble. Allow me to explain :theory-gary:
Usually investors will "diversify their portfolios," which means make some risky investments with a potentially high payout and some safe investments with lower payouts. Traditionally, t-bonds filled the role of the safer investments, because the only way they don't pay out is if the US government defaults on its debt, which means that the entire world economy has probably collapsed and you have bigger fish to fry. The Obama administration lowered the bond rate to make them a less attractive investment so the money would circulate and stimulate the economy after the 08 crash, which tbh was probably necessary; the Trump administration kept it low because Trump is a big wet boy who wanted to win political points for having a bustling economy. This meant that investment firms were looking for somewhere else to park their money that was a relatively safe investment that would give better returns than a t-bond, and they settled on real estate. Something like 18% of all homes sold in the US in the last quarter of 2021 went to an investment firm.