It’s all in the value

The commonest question that is asked is whether the prices of real estate would ever fall like the prices of equities, interest rates and gold & silver prices. When the price of any type of property starts crashing due to lessening demand with more supply; when cash is not available on demand for builders; when borrowing becomes costlier; when income has receded due to economic factors; when people are overweight on real estate without hedge across other investment class; when higher inflation has begun to eat into the savings; when property prices have escalated to such levels that it becomes completely unaffordable to own — then perhaps the crash starts manifesting. Another reason that can be attributed for the crash which could happen simultaneously along with the above mentioned factors is that when the financial institutions that have loaned across types of borrowers with higher loan to value start witnessing the first sign of borrowers being unable to meet their loan commitments. When mass default starts, the financial institutions would start selling or disposing of the underlying collateral to recover their balance receivables, such mass defaults leading to rush in property sale also leads to a crash in real estate prices. It would be a wise decision if people start considering real estate investment as part of their overall asset allocation rather than having a concentrated investment which could lead to irrecoverable damages in case of crisis.