A wave of real estate investments originating in Japan in the late 1980s created inflated real estate prices in many part of the world driven by investors originating in Japan. This ranged from golf courses, to hotels to office buildings to residential projects. This was the primary cause of the Japan financial crises which lasted over a decade.

Follow up:

In the U.S. decades ago one needed a 20% down payment to buy their first home. Under certain circumstances, people could acquire an owner-occupied residence with a 10% down payment and mortgage insurance to be paid by the borrower.

During the recent wave of real estate investments, people who had good credit could acquire properties with little or no down payment, and in many cases, with little at risk. During the boom times in real estate, potential buyers/investors could easily own numerous properties of which many have had little equity invested, thus the lenders were at risk.

During the mid 2000s many REITs (real estate investment trusts) were trading at their highs. Not unlike the dot.com boom and bust, many real estate investors saw their fortunes disappear. A significant difference between the real estate boom and bust was that financial institutions, pension funds, and now the U.S. government and many foreign governments are now putting up billions to shore up their own economies. Financial institution in many parts of the world made risky real estate loans to potential buyers, developers and others in many cases making significant fees without realizing the risks they were creating.

This writer has headed a professional service firms Bay Area Offices for real estate, has 20 years advisory experience, and has directed over $ 400 Million of real estate acquisitions and dispositions and advised a number of parties to dispose of their holdings in the mid-2000s. He has run construction projects in various sectors throughout the Western U.S.

Where do we see the real estate market headed ? will we likely another boom ?