Housing
by Joshua Dorkin
| September 4, 2006
A new report out of UC Berkley brings sobering news to the people of California. The Mercury News’s report headlined, “Housing funk spreads to jobs: Low-Income Workers Fail to Keep Pace With Inflation” details how the economic recovery in California since the dot-com bubble has not truly reached either the middle class or the [...]
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Real Estate Investing
by Joshua Dorkin
| August 28, 2006
The good people at Gallup have posted the results of their UBS/Gallup Index of Investor Optimism poll, which shows that “investors are worried that the real estate markets are continuing to deteriorate. The new poll also shows that investor optimism continued its steady seven month decline, reaching a new low point for the year in [...]
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Building Value vs. the Bubble Mentality
by Brendan O'Brien | August 25, 2009One of my favorite economics bloggers, Megan McArdle, wrote a post recently on the Washington, DC real estate market, extended to the state of the market overall. It appears to her that the single-family residential market has bottomed out, while multifamily still has a way to go.
Megan also posed the question of when, and if, a boom will begin again. Possibly, in her view, there won’t be a boom. After all, the last nationwide (really, worldwide) boom was driven by a couple of unusual factors: historically low interest rates, and a big, competitive market for subprime loans.
Megan is one of the smartest economic bloggers, and a lot of what she wrote here makes sense. Still, the post bugged me, because it focused on macro-economics, which is not the world in which most of us live.
We know that real estate investing success comes from a million factors, only one of which is the boom-bubble-bust cycle. Outsiders don’t see a lot of difference between real estate investing and stock market investing, but there is a huge difference. In stock market investing, there are really only three factors:
All those apply, in a sense, to real estate investing. You have to decide what and where to buy, pick one or more properties at what seems to be an appropriate price, and figure out when to offer them for sale, at what price. But there are also these factors:
Price Factors Exclusive to Real Estate
You can probably think of a few more. The point is that in between the buying and the selling, most stock market investing is essentially passive. Once you own it, you’re waiting for the right time to sell it. You really have no say over how the company is run.