Desire, Greed anad Fear

June 9, 2008

Desire, greed and fear seem to me the emotions that drive the market place - any market place not just the real estate market.

As human beings, we need food, clothing and shelter. This need translate into desire and the ways in which we satisfy those desires. In the real estate market place the desire for the location, the amenities and the style creates the value that folks put on a property. Eventually the demand exceeds the supply and the competition creates rising prices. As prices rise and people see their property increase in value, greed seems to enter the picture.

The rising prices create fear. Fear that one will pay too much, fear that one will lose out in the ability to purchase, just fear that one will lose.

The present real estate market is influenced greatly by the fear factor. Buyers are afraid they will pay too much and lose money. Lenders are afraid they will lend money and the borrowers will be unable or unwilling to make the payments.

At some point, desire will return because the need will overcome the fear. Perhaps we are just about there.