Financial observers have stated that the prevalence of investors assume that a trend in growth will continue, and most likely, will continue to do so indefinitely.

Such a belief is almost universal in today’s real estate market. Tim Iacono, writing on financialsense.com said, “And why not? Nothing in the last 10 years would lead anyone to believe that home prices do anything but go up.”

Iacono then proceeded to draw parallels to 2001’s energy trading market, exemplified by Enron. Like Enron, the public must ask themselves, “is the business model (of real estate) valid?” Even if it isn’t flawed, are parabolic price rises really sustainable?

Iacono concluded: “Like the hourly Enron worker with a million-dollar retirement account in 2001, the hourly California worker with a million-dollar home in 2005 looks to the future with every expectation that what they've come to believe in recent years will continue.”

Home-owners and investors continue to believe that real estate will continue to be a good bet.

By Patricia Fuller

Fort Lauderdale Real Estate