After a few years of following real estate, it is interesting to see the difference between the residential real estate market and the commercial markets.
For the residential market, real estate is home, a major investment, personal, and passionate. Decisions are not logical and are driven by status and desire.
The commercial market is all about the money, with a dash of prestige thrown in to make people stupid at the top end. But these same people know that when the going gets tough, they get out quickly.
That is why the commercial market rose quickly, prestige and the chance to make a profit of the dollars that were chasing real estate, and dropped just as fast. Bad deals were quickly recognized as bad deals and the owners sold, took their loss, and left the table with their tails between their legs.
We see more boom and bust in the commercial market, but the residential folks are jealous that a bottom can be reached quickly and that the market remains moving.
Asked why we’re seeing these institutional players doing deals now as opposed to the first half of the year, Haddigan said, “They’ve gone through the five stages of grieving — denial, anger, bargaining, depression and acceptance. Earlier in the year, there was all this buzz about Obama and TARP and TALF. It’s hard to know how deep and prolonged the downturn would be. So what I’m seeing now is a lot more acceptance from owners. I think there’s just more sobriety out there than there was a while back. People were willing to hold on six months ago, but at this point, they don’t see any light at the end of the tunnel and decide they need out.” via CoStar
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Dude,
You must be on drugs.
Simi, No drugs, sorry…
The market has taken a heck of a beating and rents have not dropped that much. The irrational exuberence has been priced out now. Now it is a matter of how the economy acts in the coming years.
Now that things are slowly balancing out maybe we can avoid this from happening in the future by making sure that you only buy a house that you can truly afford. Giant mcmansions aren’t doing anybody any good.
-Tyler
The price of the property depends on its quality and the deal between the management. Good and wise choices are the key to avoid problems.
If you want to succeed, do not say “we can prevent this in the future.” Live in reality. Enjoy the ride. The stock market has crashed every 6.5 years since it’s inception. 13 times. Every time we think we are setting it up to not happen again. The real estate market is just as volatile. A competent investor makes money in both the up and down market. I love this market and I will love the market in the recovery.
Great blog, keep the great content coming!
Hey Stephen I am with you, love the up and down in the market, for in both you'll find opportunity ……….