Residential Real Estate Economics

Boom, bust or treading water, shout the headlines. Buyers and sellers sit on the sidelines, attempting to figure out if it’s time to buy or to take profits. Has there really been a bust, or merely a slowdown? No, but we are seeing a return to the pre-frenzy days where buyers and sellers viewed residential real estate as housing and not a get-rich-quick investment. And, let’s clear up one parallel that seems ever-present, the bubble. The real estate bubble talk was filled with hype comparing the red-hot housing market with the tech stock market boom and bust at the millennium.

Unlike the stock market, housing markets are not centralized in New York, Chicago, London or Tokyo. Day-traders in stocks or small professional groups who trade for their own portfolio or others do not control home markets. Real estate markets are local, the United States is comprised of thousands of residential real estate markets, and with many having even smaller or micro sub-markets. Those who control these local markets are not listening to one national centralized voice. In the last year, statistics can illustrate that investors or buyers and sellers in Florida have determined it might be better to reevaluate strategies, while those in Houston are fueling the local housing market with record appreciation and sales volume.

Real estate investors are comprised of a larger independent-minded network than Wall Street. Builders, developers, individual investors as well as shelter-based buyers and sellers, look at fundamentals in a market to decide to participate. These fundamentals can cross a variety of business and personal decision factors. Land costs, individual needs, available land for new construction, current inventory levels, demand, new jobs, and affordability, over or under valued as compared to other markets, and perceptions of uniqueness.

Often over-looked by bubble-mongers is that each of the thousands of real estate markets has sub-markets that might be driven by a different type of investor. In areas where there is a glut of condominiums, single-family homes might be selling briskly. So, without doing a local market assessment, it’s difficult for any economist to state that the real estate market in general is boom or bust.

Mark Nash is the author of five real estate books, new for 2007; Real Estate A-Z for Buying & Selling a Home. William J. Sittig, Chief of the Science, Technology and Business Division of The Library of Congress has invited Mark to make a presentation on 1001 Tips for Buying and Selling a Home to the members, public and staff of the Library on March 21, 2007. Nash has been featured on Bloomberg Video-on-Demand, CBS The Early Show, CNN, and The Today Show. He is a syndicated columnist for RealtyTimes.com and reviews books for MyShelf.com and The Midwest Review of Books.To subscribe to his free monthly ezine; Agent to Agent visit: [http://www.AgenttoAgentezine.com]

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