Impacts Of A Dynamic Market
As real estate goes so goes much of the economy. We've all been witness to the changes and financial suffering brought to our Northern Nevada communities by the real estate collapse of recent years. It went far beyond the loss of home ownership to the many that were unfortunate enough to have that experience. Many jobs were lost, businesses were closed, buying patterns changed, lifestyles were modified, and neighbors lost.
The year 2013 brought much change to all of that. The market solidified and values began to increase. Buyers were buying homes to live in, not just for speculation. Contractors began to contemplate speculative building again instead of looking for remodel work. Money began to flow through the community from the jobs created from the activity. Cash flows from a real estate transaction in many directions. The Homeowners receives their sale proceeds, Buyers move in with associated moving and set up costs. The many people in the transaction generate income, i.e.- escrow company staff, lender staff, real estate agents and company staff, inspectors, repairmen, appraisers, utility companies, County coffers, moving companies, etc.
The widespread income generation from the transaction has an impact throughout the community. More people go to movies and restaurants, buy clothes, get things fixed, buy cars or finally get them repaired/maintained. The cash flows through the community in a positive manner with a snowball effect, i.e.- the $100 spent at the restaurant allows the restaurant owner and staff to spend that $100 on their car repair which allows the car folks to spend $100 on computer thus allowing the electronics store staff to spend $100 on ...., etc. The original $100 will be $1,000 in buying power in the community after ten such exchanges. All from one $100 bill! The velocity of money is important and has been lacking in our area for some time. As it picks up so do attitudes and emotions.
Where the sale are generating from should be considered to understand the community cash flow. We are seeing transplants to our region from other areas thanks to their real estate market improving. Many have wanted to retire to our region to experience the quality of life we love and enjoy in their retirement years. They are now able to do that and are making that move. Others are planning on moving when they retire in two to five years and are buying now to have the home they want in their retirement. As the regulations ease on loans more people can qualify for a new loan so we are seeing more first time Buyers entering the market. Some have been waiting for quite awhile for things to stabilize and the opportunity to be available to them.
Another developing market segment are those that lost their homes and are returning to real estate, the Boomerang Buyer. Many were victims of an assortment of things, but are still good property owners. Whether their loan was a poor product, they lost their job or marriage, or whatever the reason, they couldn't hang on to the high priced home and loan that they previously had. Today's prices are half of what they previously participated in and rates are about 25% lower. Loan programs are changing to allow the millions of potential Boomerang Buyers to reenter the world of real estate ownership and many are taking advantage of that opportunity. Most are buying differently than their previous venture in the real estate world, but they are buying and their cash is circulating.
Our Advice: A dynamic real estate market helps the local community in many ways. A market doesn't always need to be rising to be dynamic and have a positive influence. The movement of money in the community keeps things going. The rise in values will come in time for an assortment of reasons. As that occurs other dynamics will come in to play, but for now enjoy the positive influences you are experiencing stemming from the upsurge in real estate cash flow in our region.
The Northern Nevada market has changed, has sustained the change, and is very dynamic. The next step will be the move ups, new construction and other market enhancers that we anticipate in 2014. If you are looking to make a move in 2014 act now before others wake up to what is going on.
When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless!