YourHub.com \\ Briargate \\ Blogs \\ News & Politics \\ Politics \\ Local/State Politics

Who Moved My Coffee

“Who Moved My Coffee” is about change, especially change in the real estate market. It is about educating your self on the ever changing real estate market and coming to terms that everything in life including real estate is in constant flux. It is about dealing with real estate’s fluctuating reality as an informed consumer instead of crazed maniac looking for his lost coffee.

Blog Url: http://coloradosprings.yourhub.com/~realestateblogger

CAN POLITICANS MAKE MY HOUSE SELL FASTER?

e-mail to a friend | print this | link to this

Contributed by: Mark Young on 11/9/2006

What Now? The elections are over and the people have spoken. Every two years things get pretty crazy during the end of October and beginning of November. It is the sport of politics and yes it does seem that the sport looks more like powder puff football then professionals vying for the privilege of representation. I think I needed to say that to alleviate some pent up frustration about present day politics. However, my interest is in real estate. The question I thought was relevant after the political super bowl is "how do the elections affect the real estate market?". The boring answer is that they have little short term affect on the market. One of the myths in society is that politicians make the economy good or bad. It is true that they can influence the market with good or bad policy but it usually takes a few years for them to forget that they were elected and to make stupid policy choices based on the ever increasing influence of special interest groups. Generally speaking, it is market fundamentals that affect the market. Issues like demand, interest rates, employment, income, and costs affect what the market does. Sadly a variable that is not really a fundamental but does affect markets is investor speculation. Investors are a great part of what moves markets in healthy directions but speculators are folks that are basing their decisions on anecdotal evidence or past experiences. An example: A speculator from California buys a house in 2002 in California and in 2004 sells it and triples his investment. The investor gets a false sense of how easy it is to make a lot of money in real estate and begins to look for opportunities that he perceives mirror the occurrence he experienced in California. He talks to some friends who were in Colorado on vacation and their description is of a fast growing State with no end in site. The Investor begins to salivate as he imagines the money he is going to make buying a home in Colorado and selling it in 2 years. He imagines that he is the only one with friends communicating about the success that Colorado is having and he thinks that he has stumbled onto a treasure trove. What this investor does not realize is that he is not alone and that many others are investing in Colorado with the same purpose in mind. What this creates is a false demand that is outside the fundamentals that drive markets. A false sense of demand causes over building and always results in excess inventory which must be consumed before more production is justified. Colorado Springs is in a season of excess inventory which by definition puts the buyers in charge. The fundamentals that make a particular market strong are all in place in Colorado Springs. Job growth is healthy, income is strong, and interest rates have stayed low. What then is causing the real estate market to contract? Two reasons: 1. A loss of demand due to the evaporation of speculative investors. 2. Buyer concern that they are buying at the top of a crashing wave.

[Report this as objectionable content.]

SUBMIT COMMENT

Rate the above blog