The Florida Real Estate Roller Coaster
The info graphic and Real Estate Roller Coaster Contest
starts with some shocking numbers of lost "wealth".
As the contest suggests, here is our take on the infographic and the data as it relates to our local market in Ocala, Florida.
1) At least in Ocala, Florida there was a real bubble, so some of that "wealth" was on paper and not real. Nevertheless, like most people when the are paper rich, regardless whether it is stock market wealth or in this case, real estate "wealth", people acted and spent as if it was real.
Now it is gone! And to that sense the local economy has lost this wealth effect.
2) Although the roller coaster analogy is a very good one, there is a significant distinction. In a roller coaster, the peeks are progressively lower and lower as gravity takes its toll. In real estate the peaks and valley do come, but always with progressively higher peaks - almost like running the roller coaster in reverse. There have been 3-4 significant corrections in real estate over the last 100 years. But always, and eventually, real estate peaks at ever higher pricing. And eventually it will recover in Ocala, Florida.
3) Not withstanding 1) & 2) above, there is still considerable missing "wealth" in today's economy. Hence, the what may appear as dramatic actions of the Federal govenment to bail out various sectors of the economy. The latest may be QE3 or Quantitative Easing #3. Regardless of one's particular politics, there is no question that in order to replace the stimulous of the disappearing real estate "wealth", pumping up the economy and dramatically lowering borrowing costs is designed to do this.
But the bottom line is there are always great real estate opportunities - deals to buy, and always great reasons to sell. We posted on this just last week: