The Dynamics of the 2014 – 2015 Real Estate Market Cycle

We’ve all been through quite a ride in that last couple of years, haven’t we? The Real Estate market has moved up, down, left, right and sideways – sometimes in a rapid succession. Now we’re beginning to feel some sort of a recovery in major metropolitan areas like San Francisco, Miami, New York and Phoenix. This new market does not seem to be sustained by mortgage backed buyers like it was in 2004 – 2006. This new market looks more like an environment suited for cash-buyer speculators.

Yes, that’s right, I said the ‘S’ word. The market is being flooded with overseas speculators that are once again causing prices to be increased for Jane and John Doe. Whats peculiar about this Real Estate market revive is that it is happening primarily in upper-middle class to high-end neighborhoods. If you observe the Real Estate markets of the city, you’ll notice that the lower-end neighborhoods and ghettos are not experiencing any type of appreciation what-so-ever. In reality, there are still many abandoned and condemned houses lingering around in those areas.

If we travel back about a decade from 2015, you’ll see that prices where going through the roof everywhere. People in the inner city were getting rich, albeit temporarily as they ‘d splurge all the money they’d receive from profits of sales on 24’s, from selling off their properties. Their clients included a mixture of people getting scammed by home mortgage brokers, overseas investors, speculators, companies and clueless newbies. Now, just because this has all happened in the past does not mean that this same group of people don’t still exist, they do, but they still don’t have any purchasing power as lending is still pretty tough in this market.

Now, what we’ve been seeing are a lot of hedge funds entering the marketplace and buying properties. This is probably occurring because they’re seeing prices rise as a result of activity from these cash-buyer speculators from Europe, Asia and South America. These hedge funds are more interested in seeing higher returns in Real Estate because the stock exchange has not been treating their funds very nicely in the last couple of years. Wall Street is returning to the marketplace again but now its not in the form of mortgages, equity credit lines and other kinds of loans. Now, Wall Street is pouring their money directly into Real Estate and completely removing the consumer.

Eventually things will cool off and wall Street will retreat to the stock market once more. In the mean time there are loads of opportunities despite what is happening in the marketplace, you just have to know what you’re doing.