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Can real estate values keep climbing higher and higher ?

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With real estate prices as they are right now, one question many people are asking themselves is this - can real estate values keep climbing higher ? Is this boom for real ? For unless real estate values keep increasing for several years more, there is no point in investing in real estate.

To answer this question, we might want to take a look at the important factors that influence real estate prices - population, purchasing power of the population, and perhaps the most important of all - the preferences of the population.

Influence of population and purchasing power on real estate values ...

In most countries currently, population is increasing. Though the growth rates vary, there are more people on Earth now than there ever have been.

And purchasing power of people is now possibly the highest it has ever been. And newer technologies are constantly increasing what people earn in several parts of the world. And as technology keeps improving, people's incomes are rising too.

And what's more - the amount of wealth that can potentially be generated today is infinite. There is no Gold Standard that limits wealth of any nation today. Fifty years ago, the wealth of a nation was determined by the quantity of its gold reserves - the more gold a nation had, the wealthier it was. And the production of gold determined the rate at which the world could get wealthier. That meant a nation could grow wealthy only at the rate it could accumulate gold ... and the amount of gold in Earth is finite.

Today, nations are not limited by gold anymore - nations can create as much wealth as the minds of their people permit. The wealth of a nation is now determined by the wealth in their peoples' minds ... and the good news is that the number of people are increasing.

And what all this means is that people are now free to create as much wealth as they want, and as a result technology is growing faster than it possibly grew ever before. With these two key factors aiding real estate values, let's take a look at the third factor ...

What type of real estate do people want ?

In terms of what kinds of homes people want, the real estate market seems to be ever changing. And this is what makes this factor so important ...

There used to be a time when people seemed to love cities, and people moved in from all over to live in big cities. But the trend now seems to be that people prefer to live far from the city - in trendy condos - and work in the city ...

What's more - the preferences seem to be towards bigger and fully furnished condos now. Three bedroom condos, with another room serving as a drawing or a TV room, fully furnished ... and if possible with a gorgeous beach view.

And this means value of land around a city might be increasing faster than the value of land inside the city.

And there's another trend to consider - vacation homes. People now seem to want a vacation home in places like the Mexican Riviera and parts of Central America. The result has been that what used to be quaint little villages along the Mexican Riviera are now more like resort towns, with developers building condos, golf properties, and more. And with a relatively healthier economy in Mexico, local people are also buying property there.

What might all this mean ?

Well, what this might mean is this - the prices of real estate can keep increasing for a long time, but the degree of increase at any given place may depend more on the preferences of people. In a healthy and strong economy, real estate values may essentially be a function of what people want.


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Gurubhakta is a writer and web content developer who has developed content for several niche sites. One of the latest is http://www.abeachfronthouse.com that discusses topics like real estate along the Mexican Riviera including Baja real estate.

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