I like to see how macro trends affect investment opportunities. With an overall jittery stock market and energy prices at historic lows and continuing to fall further; how do you see that ultimately affecting real estate markets? Could there be consolidation in oil exploration industry or natural gas industry that will make certain real estate markets soft? Is this just a temporary blip that doesn't have a real impact on markets? I understand that every real estate market is separate unto itself, but how do larger macroeconomic factors present hidden opportunities (or build dangerous bubbles hidden to the average investor)?
Any market that is dependent on one or two primary industries is at the mercy of that profitability of that industry. Low demand for oil could hurt areas that are based on oil. A modest size town that losses a major industry could see the local economy and real estate values crash. (Think auto factory shuts down in a city where it is the major employer.)
Is there a generalization that one factor like dropping oil prices will affect real estate in X way? No, the macro economy is too complex for a generalization on one factor. However if you get real good at reading the tea leaves by looking at many factors you can become rich in real estate.
I've been investing in single family rentals in the north Dallas suburbs (Frisco, McKinney, Allen) which have been seen a housing boom, limited inventory, and prices rising. I'm definitely in the wait and see mode for further investment as housing already seemed frothy in my (cautious) opinion. Dallas is not a one industry city of course but inevitably bad news ripples through the state economy. As tax revenue dries up will road projects and community improvements be put on hold? Will bad news itself spook new business?? I'm watching???? No real sign of downturn yet....
When you see the sign of a downturn, it is generally too late.... It does not even need to be a real downturn, just a perception by the buyers can start the motion.
I think the oil industry can weather a temporary reduction in prices. But cannot sustain it for long periods and will cause an area to lose a lot of value. I lived in Midland in the early 90s after their boom and subsequent crash. Midland wasn't as bad, but Odessa got slammed, I would drive through that town and it was basically a ghost town. I think ultimately that is what will happened to these areas as improved fuel economy in cars and focus on conserving energy continues, lower oil prices will take out some of these towns. My dead brother in law worked in the oilfields and I saw his family prosper and starve many times. Its all or nothing in the oil fields
if one was in the Bay Area during the 89 quake and the war.. we had a mini melt down in RE prices.. that was basically regionalized.. many don't remember or knew of it.
But BAy area prices even on the peninsula and SF dropped 50%... far worse crash than the 07 to 09 slow down the bay area experienced...
And it was based on perception... The Chinese buyers just stopped buying and that really affected the Peninsula. it took about 5 years to recover and by the time of the dot com blast off price were back to 89 highs.. then a little retreat in dot com and 911.. then blast off again until 07 to 09... now we have seen another large run up.
Were as here in Oregon its just steady Eddy.
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