External Factors and the Real Estate

Where there is darkness there is ultimately light and the various homeownership opportunities under the current economy reflect this notion. Real estate prices

The question selected for this research paper has been a thought of many property professionals, particularly over the past few years as more and more foreigners enter the Australian property market. This research paper will broadly help the greater community and directly influence the typical Australian property investor who will benefit through further understanding the positive and negative impacts of foreign investment, further more:

There are millions of houses and few people buying houses. The cost of houses plummeted.

Interestingly, if you compare the number of prices reduces in February 2011 (80), to the number of current price reductions (0), it is evident that Apex is currently experiencing a seller’s market. Although homes remain on the market about a month longer, homeowners are not reducing their prices; therefore, higher-priced homes continue to sell in Apex.

America’s 2008 recession brought on “falling home prices and tight credit; state- and local-government cuts; higher oil prices that stood in the way of economic growth (“Back from the,” 2012). The price of homes dropped significantly pushing the equilibrium price down resulting in a shortage and an increased demand for houses at lower rates. When this occurs, suppliers are motivated to start producing fewer homes until a new market equilibrium price and quantity are achieved. After America’s recovery in 2009, suppliers slowly began to produce more homes and since that time, house prices have gradually increased (“Back from the,” 2012).

Two economic factors affect supply in a stable housing market, price of related goods or similar houses, and the price of the good, best represented by style or size in the case of the housing market. The affluence of a community typically determines how much homes sell for in those communities, and therefore communities where a lot of people want to live become areas where average home prices are high. (Kumar, 1) There is little space in these affluent communities, and therefore little supply. A good example is New York City, where no homes are available, only apartment buildings, and very few apartments are actively exchanged each year.

In this crazy world, it is important to find those who you can depend on- in life, in love, and especially in real estate. Finding the right group of people to network with and collaborate with is key to finding success in this field. In analyst Jonathan Littman’s article, “Real Estate Reinvented,” Littman documents information that he researched on Northern California’s Alain Pinel Realtors. An Alain Pinel Partner and the company’s President, Helen Pastorino, states that “ [she] believe[s] that the ‘every agent for himself’ hurts sales and [she has] quickly turned to using computers and networking to [her] advantage” (Littman). A successful real estate agent will not be afraid to collaborate and work with others, because he/she knows that

Before the economic downturn, it was commonly accepted knowledge that home prices would continue to rise at near exponential rates. If you did not buy a home at the ridiculous price of today, you would end up with a smaller home at a higher price tomorrow. Many felt they had no choice.

The increase in population caused a spike in housing demand, resulting in a rapid increase in property prices. When property prices are high, people will turn to rental, instead of mortgaging, as it is more affordable.

Many Michigan real estate agents who were laughing their way to the bank until recently are finding themselves unable to sell real estate at much lower prices. The glut in the market has affected real estate prices and agent commissions drastically. In fact many new agents who had just started off have moved on to other jobs. The downturn in the national real estate market has come as a blessing in disguise for buyers of Michigan real estate. The real estate prices have fallen to affordable levels making it attractive for serious

Depending on economics in the area vacant investment properties can cause real estate prices to be lower as a result of the market comps absorbing these homes into the data and comparison reports.

Many of those selling are interested in retiring, while improving economic conditions worldwide have given a larger pool of buyers the means and risk tolerance to buy an established business. The resulting balanced market gives both parties more value for the transaction, increasing more activity and generating more sales activity.

The market for home loans has had a dramatic downturn since the US Sub Prime mortgage crisis. The impact of the credit crunch has been felt here in Australia as well. “The collapse in house sales is putting the bite on Australia’s 80,000 Real Estate Agents. Sales are down, by 24 per cent in the March quarter according to RP Data, and each sale is taking longer (Singer,M,Harley R 2008)

Government policies and subsides have a sizable impact on property price, and demand. The government can temporarily boost demand with tax credits, deduction and subsidies. From the customers point of view

Declining price attract people with the easy loan facilities of their banks. And banks are ready with very high risk loans. This excess supply of home inventory placed significant downward pressure on prices. As prices declined, more homeowners were at risk of default and foreclosure. According to the S&P/Case-Shiller price index, by November 2007, average U.S. housing prices had fallen approximately 8% from their Q2 2006 peak and by May 2008 they had fallen 18.4%. The price decline in December 2007 versus the year-ago period was 10.4% and for May 2008 it was 15.8%. Housing prices are expected to continue declining until this inventory of surplus homes (excess supply) is reduced to more typical levels.