The Global Real Estate Bubble Index
Quess the year: Quotes from 2006 & 2018
What State had a 45% increase in number of home sales?
Where do 50% of home owners not have a mortgage?
When & where were 35% of all home sales less than the mortgage amount?
What was – What Is – What is to Come
This is Price-Reduced.com where we talk a lot about real estate and a little about life.
Just a reminder that you can access the links and references when you go to the transcription version of this podcast.
Information without context is much like the tree falling in the forest. Who will hear it fall? If you are a long ways from that falling tree, or around the bend, you might not see what is happening, but you could hear the barely perceptible muffled sounds of cracking branches as it forces itself against others trees on its journey to ground level. You could be close enough that the loud sound of tearing wood fibers stops you from what you are doing. You might see the tree coming down and be able to take in the whole scene and notice if anyone is within its path of destruction. The worst possible scenario is when that tree is so big and moving so fast, that you see it headed toward you and you don’t have time to react or get out of its way.
What happened to you in the 2007-2008 economy could range from business as usual to life altering devastation, economic slowdown, recession, or depression. Any one of them could describe what you experienced. Even that range of responses could vary from country to country, city to city, and even neighbor to neighbor.
Real estate and the economy can also be like the sky above us. It is just there. In the background as we go about our daily lives. It affects us but is not usually our focus. We enjoy the sunshine and blue sky but sometimes we get rain or snow. It is when the weather becomes extreme, massive amounts of rain or snow, or no rain at all for long periods of time that we take notice. It is when a hurricane comes or a tornado touches down that the weather is no longer in the background.
When you read about economic destruction remember that there are people behind the headlines. The headlines come and go, but those who struggle may continue to do so. There is an article about an Omaha debt collector
that helps us get a glimpse into what it is like in America to owe money we don’t have and what happens in the process to both the person owing the debt and the one trying to collect it.
Does the city name of Omaha Nebraska sound familiar to you? It should. This is the hometown of Warren Buffett
estimated to be worth over ninety billion dollars. Same city, same economy. But experiencing life in a far different way.
Listen to these quotes:
Sound familiar? I will tell you when those quotes were made. The first about a real estate crash not being likely was in August of 2006. The second not forecasting a nationwide collapse was May of 2006. The lasts about stubbornly sticking to list prices was about a year later than the first two, August of 2007
How bad was the housing crisis in the United States?
In December 2008 60 Minutes produced a segment called “Mortgage Meltdown
”. Take the twelve and a half minutes to better understand what was happening with various mortgage loan products and how they affected the consumer.
may have started as a U.S. problem but when Lehman Brothers collapsed, the dominos began to fall. The U.S. bond rating was downgraded and the world financial markets felt what was no longer just a corporate problem of failing businesses, but a Sovereign or governmental problem pushing countries to the brink of financial ruin.
What other Country had their stock market affected but technically missed a recession in 2007? What country had higher home prices in 2009 than 2007? And why?
CBSnews had an article entitled “How Australia Ducked the Crisis
”. One of the conclusions of the article was that their choice of trading partners, China, practically negated what was for most, a world crisis. The average Australian might have said “what recession”.
Let’s come back to Australia, whose fate may be far different now than in 2007 and 2008.
Sounds like all of Australia is on the auction block getting ready to be sold for pennies on the dollar.
Real Estate values and trends are local and what was portrayed appears to be accurate. Accurate that is for the City of Paramatta
. Maybe not for Australia as a whole.
WHAT IS TO COME
Let’s look at some current headlines or quotes that may sound similar to that of ten years ago:
I recently read an article entitled “Stop Extrapolating Your Perceptions”.
I perceive something and then I come up with my list of “also must be trues”. The last several years prices have been going up and inventory declining. That would continue forever, right? That was my reality of the moment. However, our local real estate market slowed down the later part of August. It’s the coming recession of course. The next big down turn. Or, it could be the end of summer when families with kids finish their vacations or spend all of their focus on shopping and preparation for school.
Buying or selling a home is most often an event or circumstance driven process. You buy a home to lessen the impact of increasing rent, you sell and move up when your family grows. You may also sell when it is too big, when a job change or divorce occurs.
Just as the world real estate market has common trends and yet variations down to the neighborhood level, so as buyers and sellers we have common motivations with other buyers and sellers, but yet our circumstances are unique.
What we hear about the real estate market in our area may be true, but it may only be partially true. Take the time to do your homework.
When it is time to make some decisions, it is always best to not be driven by fear.
Thank you for listening to Price-Reduced.com and always remember, financially speaking, “When it comes to real estate, the best time to buy or sell, is when you don’t have to.