Real Estate Bubble*

"The biggest real estate bubble in history" is the current worldwide boom in residential homes prices, according to a disturbing new report in the Economist magazine.


Never before have home prices risen so fast, for so long, in so many countries including the United State, reveals a front-page story in the world's most respected financial periodical.

"Rising property prices helped to prop up the world economy after the stock market bubble burst in 2000," The Economist reports. "What if the housing boom now turns to bust?

"Pain," the magazine says will result when the market "pops."

The figures detailing the bubble are daunting:


The total value of residential property in developed countries rose by more than $30 trillion, to $70 trillion, over the past five years – an increase equal to the combined GDPs of those nations.

The U.S. has experienced one of the largest increases in home prices over the past year, with the average cost of a home rising by 12.5 percent.

In Florida, California, Nevada, Hawaii, Maryland and Washington, D.C., the average price rose more than 20 percent. And in Palm Beach County, Fla., the median price of an existing home shot up 35 percent in just the past year.

Other countries have showed gains even higher than the U.S. in the last year, with prices rising by 23.6 percent in South Africa, 19 percent in Hong Kong and over 15 percent in Spain and France.

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