The real estate market greatly exploded over the last five years with the biggest shift happening in the past three years. All good things must come to an end, and unfortunately this real estate boom is over. People who have bought in the past six months have been buying at the top, and even large companies have made this mistake. One company in particular is Wachovia Bank. Its recent purchase of Golden West Financial for $26 billion is a prime example of a buying past the peak investment.
Two of the primary drivers of this real estate market mania have been peoples belief that they must own real estate coupled with a second factor of low interest rate mortgages.
The first driver is peoples fervent belief that they must buy real estate, but this herd mentality is beginning to change. Speculators buy homes as investments and these investors have been a large source of the demand for real estate in the past few years. Now, not only have speculators stopped buying but they are also selling the properties they own. As a result, inventory of homes for sale are at astronomical levels.
The second driver of the real estate market has been low interest rate...
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