One of the many dire predictions done these past few months by many ‘bubbleologists’ out there – that is all those who indulge in the contemplation of real estate bubbles of all sizes and colors, whether real or imaginary, coming our way – was that by now real estate markets everywhere would be inundated and swept away by a tsunami of foreclosures of apocalyptic proportions.The general rationale among those specializing in the fine art of staring at crystal balls (or perhaps at several empty bottles of rum) was that the steady increase in interest rates, the consequence of a tightening monetary policy implemented by the Fed since mid-2004, would have led by now to a collapse of the adjustable-rate mortgages (ARMs) market, since consumers could not possibly cope with the increased monthly payments. This, in turn, would dramatically increase mortgage defaults and foreclosures, with the end result that real estate markets everywhere would be flooded with excess inventory at deflated prices, thus causing markets to crash – the tsunami I was talking about.The Mortgage Bankers Association of America (http://www.mbaa.org) does not seem to share this particular vision of the end of the world. In its Economic Outlook update released in May 2006, the Mortgage Bankers Association of America (MBAA) pegs the ARMs share at 27 percent, down from the 36 percent peak of early 2005, an indication that many prudent consumers have locked in already. Likewise, the inventory of mortgages held by banks is virtually unchanged at 1,500 billions (aggregate nominal face value of mortgages, by dollars), the same level of 2005, suggesting that, rather than defaulting, consumers are ‘holding on’. And, finally, the rate of delinquency is at 4.38 percent, down from 4.70 percent in the final quarter of 2005, clearly another measure of consumers financial stamina, and an indication that banks were actually faring worse when real estate markets were doing better.But that’s not all!In the Mortgage Finance Forecast released also in May 2006, MBAA highlights that the rate of housing starts nationwide has increased nationwide, up to 2,131,000 units (annualized) for the first quarter of 2006 from 2,059,000 units in the last quarter of 2005 – an increase of 72,000 units representing a robust +3.496 percent overall, although this rate is forecasted to slow down as the softening trend in real estate markets continues throughout the year. Home sales overall are forecasted to decrease by 501,000 units nationwide to 6,574,000 units by December, 2006 from the 7,075,000 of December, 2005. Although this represents an annualized drop in sales of 7.08 percent compared to last year, it can hardly be called a bubble burst!And here is the most surprising figures of them all – surprising for the bubbleologists, that is. Notwithstanding the increase in interest rates and the toll that many think ARMs will take on defenceless consumers, MBAA forecasts that the average market share of ARMs will remain constant at 27 percent of institutional mortgages for 2006, down only 3% from the 2005 average. The significance of this forecast is twofold: 1) MBAA does not anticipate that interest rates will increase significantly higher for the remainder of the year and 2) MBAA mirrors a Gallup survey conducted in May 2006, which found that only 11 percent of Americans worry about ARMs, down from 20 percent in 2005.And why should they worry? In the latest release, the Bureau of Labor Statistics, has pegged the Consumer Confidence Index at 109.6 in April, up from 107.5 in March and higher than the 103.8 of December, 2005. The Consumer Confidence Index is now at the highest level since March, 2002, with the average family income up 0.8 percent in March, 2006.To finish, I would like to spend a few words on how politics are filtering into economics, especially in times of elections. It is a shame that an increasing number of Bloggers and even journalists out there are twisting and interpreting economic data to fit their own political agenda. Although November, 2006 is pretty much around the corner and the battle is on to take control of Congress, the manipulation of economic and statistical data for political ends and means is a great disservice to consumers, no matter the political colors.For example it is not true, like some Bloggers assert out there, that the recent appreciation in real property values is the direct result of President Bush’s domestic economic policies. Real estate capital growth was largely due to the correlation between capital and employment or, if you will, between income and labor. An increase in levels of consumption has set forth an increase in prices caused by a corresponding increase in demand, in itself generated by a commensurate increase in the income-employment factor. So growth was derived by the equilibrium of capital and investment with labor and employment. And since, furthermore, production is in direct function of consumers spending which increases as unemployment falls, capital accumulation has increased as employment rose steadily. It is as simple as that!Likewise, it is not true that President Bush is the main culprit for the real estate bubble burst – like many Democratic sources imply and some actually cry out loud. Poor President Bush has absolutely nothing at all to do with real estate bubbles and their bursts, essentially for two reasons: 1) because there are no bubbles in real estate and 2) because there are no bursts either. Like Prof. Bernanke has repeated now several times, far from being a bubble burst the present cooling-off trend through higher interest rates will have the beneficial effect of consolidating market wealth achieved thus far, by allowing the economy to get an even footing through a slowdown of capital appreciation and, at the same time, allowing real wages to catch up, thus reducing the affordability crisis and rejuvenating the pool of buyers.And, finally, it is not the President of Iran, Mahmoud Ahmadinejad, that is trying to promote his country’s nuclear programme by putting a stranglehold on North America’s real estate markets through higher crude prices, while attempting to get rid of Secretary Rice at the same time (I know, this is laughable, but I read it in the commentary of a political blog – TIME Magazine should make this particular blogger ‘Man of the Year’).Consumers and all those interested in an objective evaluation of real estate markets climate, are well advised to go straight to the source of statistical data and economic analysis and evaluation, bypassing all commentaries entirely, especially these days.Luigi Frascati
There are many factors that could cause any investor or future home owner to be successful or just a failure in Miami real estate market. Actually, knowing which properties to buy and the approach made in investing is all there is to become successful Miami Real Estate Market. Although, this requires different talents and abilities, all these can be learned and developed in order for someone to boom.Skills sets are available for anyone who is interested in Miami Real Estate Marketing. One of the most important among these skills is being interpersonal. This is needed when dealing with real estate negotiations. The make or break scenario usually depend on how an investor or a marketer built the relationship with the other parties in order for them to build the trust needed in closing a deal. Rapport should be established and spending time to meet with the other sellers makes a huge difference. This is a win-win situation for both parties. Whatever transaction is made as long as they were made in a healthy atmosphere then everything will turn out fine. This will also a good turn for the future when some of their business friends will be recommended as well.Simple mathematics should also be learned in order to be successful in Miami Real Estate Market. One should learn how to analyze the monthly cash flow and how the appreciations of property costs are being computed. It also important to do computations on how much is to be considered for renovations and repairs and relate the results to the flipping and the fixed sphere in Miami Real Estate Market. Tag an architect and a contractor along to assume whether the transaction being made is reasonable.Lastly, remember that bargaining especially in Miami Real Estate Market really has need of patience as there are more than a hundred of real estate properties to choose from. Look for something that would yield better results and costs in the future to make sure that such property is a sure deal. See to it that the Miami Real Estate Market property is personally examined to be assured of the things itemized during the agreement and something that fully met the required needs.Consider these tips in order to yield successful results in Miami Real Estate Market, specifically leasing:- expect more than ten times of responses if an ad is placed with the “Option to buy” terms than when a “for Rent” is placed. That is because many are still trying to buy a piece of property in Miami and leasing could be their last resort.- there are more calls coming from more interested tenants to a property and there is higher price involved.- remember that the lease option when selling out a property yields more monthly income. The fees include the granting the lease fee and the monthly rent for the property. In return more cash flow is expected.- it’s a positive outlook for future buyers as well because they are given the opportunity and the chance to possibly own a place in one of Miami’s real estates. These people are willing to pay a higher amount for the leasing agreement just to have a place of their own.
Luxury real estate marketing professionals need to stay abreast of current etiquette when conversing with high net worth clients. Economic conditions tend to affect the degree of conspicuous or inconspicuous consumption. But, is flaunting one’s wealth ever in style?To quote 12/25/08, Minneapolis-Saint Paul, Star Tribune article titled New Recessionary Etiquette: Luxury Shame?”Across office suites, dinner parties and foundation boardrooms, inconspicuous consumption is the new recessionary etiquette. To do otherwise at a time when neighbors and family members are getting pink-slipped is considered simply poor taste. The tokens of success — a Cartier timepiece, Christian Louboutin shoes — are being worn more discreetly, or not at all.”Given the current economic conditions and the propensity of the media and talking heads to point out the downfall of the luxury retail market this holiday season, the following question comes to mind: Is luxury itself out of style?The answer is NO. The essence of luxury is an object or a service that is well made/well done. Again the governing concept of an item is that is of exceptional craftsmanship which implies its long lasting value. A great service implies that you will return for that great service over and over again because it is worth it. The very well to do populace is not the only ones who buy luxury. There are quite a few people who may buy an item because of its “superior quality or performance.” They understand that because it is a superior product, its longevity will make the purchase an economically sound decision.There are people who will drive their Mercedes for 20-30 years. Divide the original purchase price by the number of years, and you will discover that given the performance and the lasting quality with which the vehicle is built, it is a bargain. In addition the resale value is higher, and if the model is sought after by collectors, it resale can be astronomically more than its original purchase price. A well made piece of furniture last lifetimes and is often passed from generation to generation. An authentic Chippendale is worth a fortune on today’s market. With falling prices on many durable luxury items, those in the know are purchasing them.The same could not be said about some luxury purchases. If one were to purchase a pair of satin Christian Louboutin shoes for $1500, the chances of those shoes surviving into the next century are not so great, even though they are well made and well crafted. The intention here is not to condemn the purchase but to illustrate the concept of long term luxury. It is possible that the wearer may be so careful as to avoid every possible scuff and not damage them at all and hand them off to a granddaughter with the same exact shoe size at some point in time!What is out of style and what has always been out of style is in your face luxury i.e. bragging about and flaunting recent purchases. Etiquette is a lifelong pursuit and is not dependent on economic conditions to practice it. It depends on one’s understanding and appreciation of all the conditions that life has to offer and reacting to them in a gracious manner.
When you watch the news, you would usually hear about real estate and the latest economic condition. Everyone, especially investors, have various assumptions on what would be the effect of the economy to the real estate sector nowadays. Given the fact that all industries are struggling to cope with the turmoil, a lot of people are curious of what would happen in the future. Is it still feasible to invest? What form of investment should you make? These are some of the issues that are bothering in most homeowners. But what is really the score of real estate sector now?The majority of realtors are having doubts on pursuing their moves regarding investment. They are hesitant since they might end up broke. But there are also homeowners who are determined to own a house despite the skyrocketing prices and interests. For them, credit crunch can not stop them from owning a property. They have carefully planned their move and they have gathered enough funds to suffice the needed resources. Hence, nothing can hinder them.However, if you try to consider the opinions of other businessmen, they are discouraging realtors to invest in these times. They suggest waiting for the interests to lower down as well as wait for the economy to become stable. But the problem is, nobody knows when that would happen. According to real estate investors, it is wise to rent first instead of buying. Since leasing will not have to deal with interests. You will simply secure your monthly amortization to be able to stay in your house.On the other hand, lending companies have been looking for more ways on how to entice homeowners apply for mortgage. Some of them would come to a point of lower their interest rates just to show that now is the best time to invest. Prices of the properties have gone down due to adjustments. There are so many properties sleeping in the real estate market that need new marketing techniques so they can be sold faster. This scenario is favorable to home buyers.Investing, particularly on real estate, can really be confusing. Even if the economy is already stable, you still have to be careful in making your move. It requires a significant amount of money and keep in mind that you are using blood money. It is not as simple as buying a dress, if it does not fit, you can have it changed. Real estate investing is a serious matter. So do not be in a hurry. Take one step at a time.The economy plays a very important role in all sectors, especially in real estate. Whatever the current condition of the economy, investors have mixed point of views. But no matter what the economic condition is, the very first thing you have to secure is your finances. Even if the rates are low, if your financial capability is still not that stable, you can still fail in the end. So before entering into this type of venture, deal with you own finances first.