The fundamentals of forging change.

Factors having primary and initial impacts on the industry:

1. Jobs Move Real Estate (Updated Monthly)

2. Interest rates (Updated 11/06/2008)

3. Real Estate Price Speculation (Updated 11/06/2008)

4. Home Equity (Updated 11/12/2008)

5. Rents (Updated 11/12/2008)

6. Loans (Updated 11/28/2008)

7. Inflation & CPI movement (Updated 11/01/2009)

8. Consumer confidence (Updated 4/30/2010)

9. Savings

10. Construction (Updated 11/02/2009)

Factors having concurrent secondary influences on the industry:

11. Inventory

12. Value deflation

13. Pricing (Updated 10/01/2009)

14. Stock market values (Updated Quarterly)

Factors having long-term impacts on population, monetary policy, or regulatory policy:

15. Retirees

16. First-time buyers (Updated March 5, 2009)

17. Fiscal spending (government policies)

18. Dollar devaluation

19. Politics

20. Exchange rate

21. Taxation

22. Birth rate

23. Regulation

Factors now having one-time shock effects:

24. Weather

25. War/civil unrest

26. Oil prices

These are first tuesday’s observations and commentaries on the fundamentals controlling the analysis of real estate valuation from a price, time and location matrix, with thoughts on realistic expectations about the future use and occupancy of real estate owned or leased.

Such a review is challenging to write and to read. In producing the review, we are paying close attention to the application of long-lived real estate concepts to future transactions. This allows for an informed prediction of the future for real estate market participants such as brokers, agents, sellers, buyers, tenants, landlords, builders, and lenders.

As you are directly effected by the future of this industry, we ask you for your input on the consequences the 26 factors will have on current activities of brokers and their agents as we leave the seller’s market behind, activities ranging from client negotiations and contracting to escrow practices and lending.

We will be reviewing 26 factors and fundamentals which have historically affected real estate transactions. They have been categorized by whether their effect has:

  • a primary and initial impact on the industry;

  • a concurrent secondary influence on the industry;

  • a basis in population, monetary policy, or regulatory policy; or

  • a one-time shock effect.

On all subjects, the opinions of experts predicting the future are unreliable, giving no better advice on which of the two diametrically opposed opinions of the future is accurate than would the flip of a coin. On the other hand, the wisdom of the crowd with its collective knowledge has an 85% to 90% track record for accuracy.

Thus, the collective knowledge of a cross section of real estate brokers and agents who have been actively involved in real estate transactions will have an accuracy nearly double that of an opinion given by any self-described expert. The goal of this series is simple: we are aiming to get information from those in the fray so readers can better explore the impact of each factor of the list of 26, and use the information to help develop the course of their real estate activities in the long-term buyer’s market we have entered.