Real Estate
The term Real Estate is used to refer to land along with anything permanently affixed to the land. Real estate has traditionally been an investor friendly sector. The reason for this is that unlike stock markets, the real estate market is less liquid. This translates into a much slower “crash” process and less volatility. Real estate prices have a deep impact on urban, suburban and rural landscape. In the US there exists a commonly accepted measurement of home prices known as house price index.
Real estate pricing decides the method of valuation of real estate prices. It follows three methods of evaluation appraisals with comparable properties, capitalization rate comparisons with similar income producing properties and discounted value of expected future cash flows. After the estimation of real estate prices, home price aggregates are reported in two ways: median and mean. Median home pricing divides the real estate market into two halves, in terms of pricing. One half of all the homes were sold above the median prices and the other half below it. The Mean measurement is calculated by dividing the sum of prices of all the homes in an area by the total number of properties sold in that area in the same period.
The real estate bubble is a type of economic bubble that shows up periodically in both the local and global markets. It is the phenomenon by which the valuations of real property like housing goes into ascendance frenzy, till they reach unsustainable levels relative to incomes and economic entities. Real estate bubbles have been known to exist in several parts of the world, especially in the US, UK, Italy, Spain, Norway, China, India and Romania, Sweden and Russia. However there has been a tremendous collective rise in real estate prices in the recent times, which many consider to be the biggest bubble.
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