The Global Financial Crisis and Real Estate (part 3)

The Global Financial Crisis and Real Estate (part 3)
Residential property markets are much more complex that retail. In most of the emerging market countries, internal demand is keeping the markets moving if not robust. The buyers in these markets are used to paying cash or a very high percentage of the price in cash. The entrepreneurs in the countries are used to making something out of nothing. There local use markets should suffer very little disruption. The 2nd home market that has been helping the more exotic locations will probably suffer some. The bargain hunters will reap a harvest. The builders and developers will lose some profit and have higher sales costs. The good ones will survive.
To make predictions in the developed economies is harder. Dr. Lawrence Yun made a speech about the BRIC countries at the Brazil Summit last month. He said the 3 things that emerging (real estate) markets need to advance are 1) Access to financing, 2) Mobility of the populations 3) Reduction or measurement of risk. This last really means transparency, economic freedom and respect for property rights. Even though he was talking about emerging markets, I see the relevance in the developed markets. Right now no-one really wants to buy because of uncertainty (risk). People who are mobile are unable to sell the homes they already own; so they have to rent.
The rental home market is still good in Charlotte. I have a feeling that in markets where there are a lot of foreclosures, there may be a lot of houses available and many unqualified renters trying to rent them. How many landlords will make the same mistakes the banks did?
Next posting will be a continuation of residential.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com