The housing bubble, a result of the cowboy financing, is a very important element in the current financial crisis. However, probably the most disturbing fact is that this bubble is continually growing, thus affecting world economic progress, leading to massive financial losses.

How exactly was the housing bubble obtained? As the stock bubble continued to grow in the middle 1990s, the housing bubble grew up in the United States. And therefore it started to grow rapidly in the beginning before experts began thinking how to take control of it. As a result of the stock bubble growing alongside the housing bubble, stock consumption also began to grow extremely fast in the late 1990s, affecting savings rate, which actually fell from 5 % in the beginning of the 1990 decade to just 2 % in its end. Having in mind that many people at the time, trying to find a way to spend a large quantity of their new stock wealth on housing, began looking for better and more expensive homes not only for themselves but the whole family and even grandparents. You probably know well that every (even the slightest) increase in demand leads to an increase in price, which is, however, soon to decrease in order to be maintained people's mass interest in the considered goods. The unexpected increase in prices led to even more house sales, because not knowing when exactly the increasement would continue, people actually gave their best to spend more and accordingly take wonership of as much real estates as possible, probably intending to sell those a couple of years later.

The inflation in the beginning of the new millenium caused a serious adjustment in real estate proces, which lead to their increasement with the fenomenous 30 % - this was extremely shocking as the last hundred years showed stable and almost unchanged house and real estate prices as a whole.

The most frapant fact about a decade ago was, however, that rents had gone up by only less than 10 %, which, in fact clearly indicated that a housing bubble is beginning to decisively form and rapidly grow. However, the situation might have been handled in the wrong way, because people continued to desperately buy and in 2002 home prices were nearly 25 % higher than they had been in the first years of the financial crisis (1992-1995) when the germ of the housing bubble began its formation.

Real estate articles

Since they were first opened in the United States, real estate investment trusts became a very important part of American Industry, becoming a global phenomenon as they provide a large number of real estate investment opportunities to investors and even offer tax advantages for companies, buying or selling real estate property.

The current material cannot actually be referred to as a global analysis of real estate investment trusts as it won't be detailed enough, but will help you get a fairly clear picture of what this term really means and illustrates. There are actually many professionally written books on the subject, whose authors have studied the global economy and the market for years and are therefore able to clearly and undoubtedly explain the sophisticated and extremely complex mechanism of real estate investment trusts (also called REITs) as a whole.

There are many companies in this field, concentrating on income producing rental properties' investment, especially in large formats, thus providing unit holders with larger cash distributions.

There are, however three types of REITs (Real Estate Investment Trusts) - hybrid, mortgage, equity.

Hybrid REITs actually combine the investment functions and strategies of equity REITs and mortgage ones by investning not only in properties but also in mortgages.

Mortgage REITs loan money to owners of real estates in order to enable them to invest in mortgages /for example purchase mortgage backed securities/ . Mortgage Real Estate Investment Trusts (REITs as mentioned previously) are responsible for the ownership and investmen of property mortgages as a whole.

So what is the exact role of equity REITs - they mainly own properties they have previously invested money in (in this way becoming responsible for the value or equity of the real estate assets, owned by the considered company) . The property rents, which are determined by equity REITs specialists, provide Real Estate Investment Trusts' revenues. However, there are also other sources of revenues which are less important.