Are We Back to a More Normal Real Estate Market?
January 12, 2010
Real estate markets are subject to many descriptions. There is the "bubble", the "bottomed out", the "boom", the "rising", and the "falling". Then, of course, real estate brokers and agents refer to a "normal" market.
What really is "normal"? In describing a person, "normal: is generally considered average growth and intelligence. When referring to other entities, "normal" can mean "standard", "typical" or "usual". So how does "normal" describe a real estate market?
First off, real estate markets are local. They are influenced by the desire of folks to live in certain locations and by the employment base. They are also influenced by the economic environment both locally, nationally and, of late, globally.
Secondly, as far as my research has determined, real estate markets are cyclical. If a "normal" real estate market is going to behave cyclically, then it may be that we have just completed one cycle and will begin another cycle. Obviously the cycle just completed seemingly had higher peaks and lower valleys. I have charted the cycles in Redlands since the early 1960s and the patterns of each decade have been similar and a "normal cycle seems to be 10-11 years.
Looking at the charts of the past 40 years, a normal cycle will begin with the "bottoming out" and then the so-called "normal" market in which buyers and sellers negotiate prices back to a "willing seller and a willing buyer, ready and able, who determine the market value of a particular property. As long as there are enough willing buyers, willing sellers, and lenders willing to make loans, the market tends to be stable. This environment is what real estate practitioners consider a "normal" real estate market.
Due to the foreclosure situation and the need to reduce the number of upside down home owners, it may be a while before a true "normal" market occurs. However, it does seem that sellers (even if they are lenders) and buyers are willing to negotiate and make a transaction. This is the real characteristic of a "normal" real estate market.
Real estate markets are subject to many descriptions. There is the "bubble", the "bottomed out", the "boom", the "rising", and the "falling". Then, of course, real estate brokers and agents refer to a "normal" market.
What really is "normal"? In describing a person, "normal: is generally considered average growth and intelligence. When referring to other entities, "normal" can mean "standard", "typical" or "usual". So how does "normal" describe a real estate market?
First off, real estate markets are local. They are influenced by the desire of folks to live in certain locations and by the employment base. They are also influenced by the economic environment both locally, nationally and, of late, globally.
Secondly, as far as my research has determined, real estate markets are cyclical. If a "normal" real estate market is going to behave cyclically, then it may be that we have just completed one cycle and will begin another cycle. Obviously the cycle just completed seemingly had higher peaks and lower valleys. I have charted the cycles in Redlands since the early 1960s and the patterns of each decade have been similar and a "normal cycle seems to be 10-11 years.
Looking at the charts of the past 40 years, a normal cycle will begin with the "bottoming out" and then the so-called "normal" market in which buyers and sellers negotiate prices back to a "willing seller and a willing buyer, ready and able, who determine the market value of a particular property. As long as there are enough willing buyers, willing sellers, and lenders willing to make loans, the market tends to be stable. This environment is what real estate practitioners consider a "normal" real estate market.
Due to the foreclosure situation and the need to reduce the number of upside down home owners, it may be a while before a true "normal" market occurs. However, it does seem that sellers (even if they are lenders) and buyers are willing to negotiate and make a transaction. This is the real characteristic of a "normal" real estate market.
posted by shirley harry at 7:39 AM
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