If you own real estate or are thinking of buying real estate then you better pay attention, because this could be the most important message you receive this year regarding real estate and your financial future.The last five years have seen explosive growth in the real estate market and as a result many people believe that real estate is the safest investment you can make. Well, that is no longer true. Rapidly increasing real estate prices have caused the real estate market to be at price levels never before seen in history when adjusted for inflation! The growing number of people concerned about the real estate bubble means there are less available real estate buyers. Fewer buyers mean that prices are coming down.On May 4, 2006, Federal Reserve Board Governor Susan Blies stated that “Housing has really sort of peaked”. This follows on the heels of the new Fed Chairman Ben Bernanke saying that he was concerned that the “softening” of the real estate market would hurt the economy. And former Fed Chairman Alan Greenspan previously described the real estate market as frothy. All of these top financial experts agree that there is already a viable downturn in the market, so clearly there is a need to know the reasons behind this change.3 of the top 9 reasons that the real estate bubble will burst include:1. Interest rates are rising – foreclosures are up 72%!2. First time homebuyers are priced out of the market – the real estate market is a pyramid and the base is crumbling3. The psychology of the market has changed so that now people are afraid of the bubble bursting – the mania over real estate is over!The first reason that the real estate bubble is bursting is rising interest rates. Under Alan Greenspan, interest rates were at historic lows from June 2003 to June 2004. These low interest rates allowed people to buy homes that were more expensive then what they could normally afford but at the same monthly cost, essentially creating “free money”. However, the time of low interest rates has ended as interest rates have been rising and will continue to rise further. Interest rates must rise to combat inflation, partly due to high gasoline and food costs. Higher interest rates make owning a home more expensive, thus driving existing home values down.Higher interest rates are also affecting people who bought adjustable mortgages (ARMs). Adjustable mortgages have very low interest rates and low monthly payments for the first two to three years but afterwards the low interest rate disappears and the monthly mortgage payment jumps dramatically. As a result of adjustable mortgage rate resets, home foreclosures for the 1st quarter of 2006 are up 72% over the 1st quarter of 2005.The foreclosure situation will only worsen as interest rates continue to rise and more adjustable mortgage payments are adjusted to a higher interest rate and higher mortgage payment. Moody’s stated that 25% of all outstanding mortgages are coming up for interest rate resets during 2006 and 2007. That is $2 trillion of U.S. mortgage debt! When the payments increase, it will be quite a hit to the pocketbook. A study done by one of the country’s largest title insurers concluded that 1.4 million households will face a payment jump of 50% or more once the introductory payment period is over.The second reason that the real estate bubble is bursting is that new homebuyers are no longer able to buy homes due to high prices and higher interest rates. The real estate market is basically a pyramid scheme and as long as the number of buyers is growing everything is fine. As homes are bought by first time home buyers at the bottom of the pyramid, the new money for that $100,000.00 home goes all the way up the pyramid to the seller and buyer of a $1,000,000.00 home as people sell one home and buy a more expensive home. This double-edged sword of high real estate prices and higher interest rates has priced many new buyers out of the market, and now we are starting to feel the effects on the overall real estate market. Sales are slowing and inventories of homes available for sale are rising quickly. The latest report on the housing market showed new home sales fell 10.5% for February 2006. This is the largest one-month drop in nine years.The third reason that the real estate bubble is bursting is that the psychology of the real estate market has changed. For the last five years the real estate market has risen dramatically and if you bought real estate you more than likely made money. This positive return for so many investors fueled the market higher as more people saw this and decided to also invest in real estate before they ‘missed out’.The psychology of any bubble market, whether we are talking about the stock market or the real estate market is known as ‘herd mentality’, where everyone follows the herd. This herd mentality is at the heart of any bubble and it has happened numerous times in the past including during the US stock market bubble of the late 1990′s, the Japanese real estate bubble of the 1980′s, and even as far back as the US railroad bubble of the 1870′s. The herd mentality had completely taken over the real estate market until recently.The bubble continues to rise as long as there is a “greater fool” to buy at a higher price. As there are less and less “greater fools” available or willing to buy homes, the mania disappears. When the hysteria passes, the excessive inventory that was built during the boom time causes prices to plummet. This is true for all three of the historical bubbles mentioned above and many other historical examples. Also of importance to note is that when all three of these historical bubbles burst the US was thrown into recession.With the changing in mindset related to the real estate market, investors and speculators are getting scared that they will be left holding real estate that will lose money. As a result, not only are they buying less real estate, but they are simultaneously selling their investment properties as well. This is producing huge numbers of homes available for sale on the market at the same time that record new home construction floods the market. These two increasing supply forces, the increasing supply of existing homes for sale coupled with the increasing supply of new homes for sale will further exacerbate the problem and drive all real estate values down.A recent survey showed that 7 out of 10 people think the real estate bubble will burst before April 2007. This change in the market psychology from ‘must own real estate at any cost’ to a healthy concern that real estate is overpriced is causing the end of the real estate market boom.The aftershock of the bubble bursting will be enormous and it will affect the global economy tremendously. Billionaire investor George Soros has said that in 2007 the US will be in recession and I agree with him. I think we will be in a recession because as the real estate bubble bursts, jobs will be lost, Americans will no longer be able to cash out money from their homes, and the entire economy will slow down dramatically thus leading to recession.In conclusion, the three reasons the real estate bubble is bursting are higher interest rates; first-time buyers being priced out of the market; and the psychology about the real estate market is changing. The recently published eBook “How To Prosper In The Changing Real Estate Market. Protect Yourself From The Bubble Now!” discusses these items in more detail.
Including art in your garden design can be loads of fun and bring a unique quality to your outdoor spaces. Whether your selections are flamboyant or subtle, a small decorative piece or a major work, artwork of any kind in your garden can create a major point of interest for visitors and an ongoing source of inspiration for you.For many people the idea of selecting garden art can be quite daunting so they hurry the process or avoid all together. Art has been closely linked with garden design since early civilisations and still today has an integral garden design function to play. With the right state of mind you can find the perfect piece of art to complement the mood of your outdoor world, no matter its size or layout, that will bring you pleasure for many years to come.The choice of garden art available to designers now is greater than ever before. From Iron and copper sculptures to marble figures, mosaic balls to plated tables, modern garden art encompasses all cultures and styles. Even for the most experienced designers the choice can be overwhelming, so where do you start?Be PassionateThe first step in selecting garden art is to trust your instincts. Chose something that you feel passionate about – not what is in style at the time or what you’ve been told to buy. Your own confidence in what you like is the starting point for selecting any artwork. If you aren’t certain what you like be patient and find a piece that stands out or one you ‘keep coming back to’.Frame The ArtWhen deciding on a location for your new piece of garden art consider these points:Think about where you will view the work from – the view from inside your home is just as important as from the garden.
Framing is equally about blocking details out as it is highlighting the piece – distracting elements must be blocked out to provide maximum impact.
Framing with plants will subtly blend the artwork into the garden.
Try an overhead frame like an arch or arbour – try framing your art with a pattern around the base such as paving, stones or a hedge.
Introduce a reverse frame by growing vines on a wall – place a sculpture in front of the wall and trim the leaves behind it.Create A StatementAlways have a vision of the kind of presence you expect the artwork to have in your garden. Is it going to be a focal point or a finishing touch? Whatever piece you decide on it must draw your attention.Consider what kind of lifestyle your garden is tailored to. Is your garden designed for entertaining, relaxation, activity or aesthetics? Your selected artwork must blend and suit the ‘lifestyle’ of your garden. If it doesn’t suit it will not work. For example, slate and stone sculptures will create a sense of oasis and relaxation, particularly when combined with water. Murals with colour incorporated or glazed ceramics will be more stimulating and better suited to entertaining areas.Know your Garden StyleYou must know and understand the ‘style’ of your garden. Japanese, urban, formal, cottage, Tuscan, country or other – you must consider your garden style to chose your artwork correctly. The art must compliment the style. Any individual piece can look terrific given the right setting. What is important is that the opposite is also true – any art can look awful if it clashes with the rest of your garden. Rustic farm style artwork will not suit a Tuscan themed garden. Likewise an abstract sculpture will look out of place in a country-style garden.Also consider the association between materials and garden styles. Unglazed terracotta works for instance are associated with Tuscan gardens, marble pieces with formal gardens, timber and iron with country gardens. While your artwork should stand out in the garden, it should serve to highlight your chosen style, not detract from it.Key To SuccessThe key is to keep the perspective of your entire garden in mind when choosing garden artworks. If you have a style already firmly fixed try taking some photos of your garden with you when shopping for pieces to compliment it. If you intend for the artwork to be a focal point of your garden, it is best for it to be part of the gardens original design.Try sketching your garden to scale and include the intended locations for your garden art. This will help to ensure that the pieces you purchase are the correct size for the locations. The most common error made when selecting artworks for the garden is purchasing items that are too small. To get a feel for how the artwork will impact your garden try placing an object of similar size in the location.Be PracticalTo conclude I will stress the importance of practicalities. These few tips will help ensure wise decisions:Consider children in the garden – if they use the space for physical activity chose artwork that is not easily broken.
Avoid placing pieces on walls or steps where they may be easily knocked off.
Concrete pieces may crack if subjected to locations that are likely to have dramatic changes in temperature.
Water sculptures made from concrete should be treated with a proprietary sealing agent to prevent lime from leaching out.
Sedimentary stone based artworks such as limestone and sandstone are porous and can attract mosses and lichens.
Glazed finishes on artworks will ensure they don’t fade or rust.This practical advice should help you to choose artwork for your garden that blends in and creates interest as a focal point. If you have any further advice about selecting pieces for the garden let us know your ideas in the comments section below. Happy gardening!