Visible stages of development of a bubble in the market of real estate (to what we are taught by world history)
1. The insignificant group of financial bigwigs carries out the thorough analysis (with involvement of the best experts in the area) on possible financial returns from investments to the studied region
2. It becomes clear that available there are big sites of rather inexpensive earth, including in quite attractive places (ecology, mountains, the coastline, transport availability, etc.)
3. Rough construction
of the Smart Earth hotels
begins is divided into sites and is on sale under construction.
of the Building are under construction on the latest technologies.
new roads and the airports Are constructed.
Is created excellent infrastructure.
Are under construction artificial islands.
Are attracted the best architects, everything is under construction according to architectural projects independent construction is forbidden.
4. Laws the minimizing taxes giving various preferences are pressed through.
5. Conditions for receiving favorable mortgage loans are created.
6. The bubble grows not only thanks to activity of builders it is also promoted by the general positive economic a trend. Quickly the economy develops (the reasons can be different (change of an economic course (as in China), World War I (as in the USA), etc.) )
People quite recently hardly acquiring food, suddenly begin to make good money there is not a grasp of labor, the income of the population many times increases.
goes in Accelerated tempo laying of new transport arteries.
the Population will be urbanized.
More and more people are capable to improve the living conditions.
7. New elite settlements for the elite are under construction.
8. Soon enough these places begin to enjoy the increased popularity.
9. Mass media shout of advantage of acquisition of real estate in these parts.
10. In the market revelry of speculators grows.
11. There are settlements satellites.
12. New projects are given the sonorous shouting names and mottoes.
13. Begin to build and sell selectively more modest real estate for representatives of middle class for more reasonable prices.
14. The peak of a bubble falls on that period when begin to build and sell real estate for representatives of middle class in mass quantity.
15. The set of realtor offices in which not the imaginable number of agents works opens.
16. Terribly volumes of transactions grow (many objects of a bubble are on sale in the first day of sales).
17. The real estate scatters as hot pies.
18. Trade in derivatives begins (resell several times actually not real estate and only the right for its possession in the future … and this right changes the owner several times before the actual end of construction.
19. The most expert and clever begin to transfer funds to other assets.
20. All is on sale sites under building of commercial, residential real estate, ready objects, do not complete, the earth.
21. Already by the end sell everyone not so much real estate, how many dream, opportunities which allegedly at you will open.
22. On the buyer I begin to press to speak that it is the last chance to acquire real estate at the good price.
23. To attract buyers arrange the real shows (invite celebrities, many famous people acquire in these parts property) to
24. Organize to some potential clients free buffet receptions in smart hotels and offices with demonstration of presentation materials.
25. Free rounds for survey of objects on the place are offered.
26. The majority of projects is on sale at a stage of initial documentation demonstration of advertizing leaflets is used, but not inzhenerno - technical and financial characteristics of objects which are already on sale without preliminary survey of a site (if the buyer is not able to arrive to it suggest to acquire real estate without departure to the place of object and many make such transactions buying “pig in a poke“)
27. All is on sale (sites on the boggy district, near livestock farms, near the former settlers, etc.) (buyers do not go into details and there are enough everyone).
28. On everywhere advertizing of real estate.
29. So-called favorable terms of sales are offered (with payments by installments, discounts and gifts).
30. By the end of boom realtors suggest to get a real estate object with the minimum advance payment 20, 10 and even 5 percent.
31. The phenomenon of bulk not reasonable sellings, is presented not as mass psychosis and as an indicator of intensive development of the region.
32. Than not supported forecasts for the repeated growth of tourist streams and constantly living population in the region are under construction not reasonable and.
33. The region and the truth some time intensively develops at the expense of the raised funds all of new investors and illusion begins to be formed that it will proceed eternally.
34. Tax conditions change, preferences are cancelled, banks begin to issue the credits more carefully.
35. Gradually sales volumes (though in the beginning attach it significance a little and no who especially worries) begin to fall.
36. It is more difficult to become to obtain simple statistical information on a real situation in the market (now not favourably to show it in the advertizing purposes).
37. The part of real estate begins to be empty.
38. Growth of rental rates stops.
39. That who acquired real estate for resale is not able to realize it even at the acquisition price any more.
40. Mass media at first it is careful, and then on interruption begin to speak about the termination of boom (that aggravates a situation).
41. In other regions of an event begin to develop similarly.
42. Inertially increase in new objects not in smaller, and sometimes even in more than a wound volume continues to happen, surplus of the offer turns insignificant falling into the beginning of accident.
43. Banks begin to select property from - for delays of debt obligations and to offer them for sale by that accelerating already almost landslide process.
44. Not only the private companies, but also municipal structures become bankrupts.
45. Outflow of the capitals from banks begins that results in bankruptcy and credit institutes.
46. In the market there comes the collapse.
47. Having sustained some pause realtors and builders enter the market again. Take place exhibitions and advertizing actions on which as exhibition barkers sellers suggest to buy “favourably“ from them real estate, promising to potential owners real estate at extremely low prices (cheaper will not be any more) speaking to everything that the market passed a bottom.
48. The market continues to fall...
According to the similar scenario (with insignificant notes) events developed in many countries I will list only some of them the USA, Japan, Dubai, Bulgaria, Spain …