"Would it be accurate to say that markets are driven by two emotions: fear and greed?" If that is the case, then significant opportunities arise when things are negative.
Fear vs.
Greed.
When real estate prices suffer losses for a sustained period, individuals become fearful of further losses.
However, being fearful leads to hesitation and hesitation based on emotion can become just as costly as being too greedy.
Let me explain ...
History has taught us how greed dominated the stock market rise during the dotcom boom and how quickly that greed turned to fear after its bust, evidenced by people switching to low-risk, low-return investments.
Did we learn from history? Since the stock market low on March 5, 2009 ...
the S&P 500 has rallied and produced a very respectable gain of approximately 50 percent.
We saw people, out of emotional fear sell low but are now scrambling to buy, but at higher prices.
We also saw the price of new houses rise by 300% and the price of raw land rise by 1,000% during the real estate boom of the 1980's.
Then the bottom fell out in 1992.
However, after hitting bottom, real estate prices increased to an annual rate of 25% and the price of land rose to an astounding 1,700%.
Can we learn from history and apply it to today's real estate market? Buying and selling decisions are more often motivated by people's fear or greed rather than logical thinking and a study of history.
Will logic help us find hidden value in a market that is presently down 30 to 50 percent? According to the Commerce Department - New home sales were up for the fourth straight month - Orders for durable goods were up 5% last month - U.
S.
consumer spending was up in July - Confidence among U.
S.
consumers was higher than forecast in August According to David Berson, chief economist for the PMI Group, residential construction and home sales led the way out of the previous seven recessions.
If we are too fearful to explore, are we missing an opportunity? Investing genius Warren Buffet famously wrote, "be fearful when others are greedy and be greedy only when others are fearful.
" When it comes to buying a home that you intend to live in for at least 10 years, there is little to no risk of losing money on your investment, even if the market continues to drop or remains stagnant a little longer.
Significant opportunities arise when things are negative President Dennis Lockhart of the Federal Reserve Bank in Atlanta said.
"Evidence is mounting that the worst of the economic downturn is behind us.
" The U.
S.
is expected to help lead the world out of its recession.
With interest rates near historic lows and the market heavily favoring buyers, it's practically a risk-free proposition.
Today's economy has provided the savvy buyer an opportunity to negotiate the best prices.
Now is a great time to go shopping - Building costs will never be lower - Mortgage interest rates are at an all time low - Inflation (or hyperinflation) is just around the corner ...
(At some point, we are going to have to pay for the stimulus spending) - Housing affordability is at its highest level in 18 years.
If you currently own land or building lot, now is the time to build a custom home.
You have an opportunity to get great deals on new construction.
Builders and subcontractors are presently motivated to negotiate a great price deal with you.
One clear favorite ...
Going green "Sustainable" and "renewable" materials are in high demand based on present trends, according to the American Institute of Architects (AIA).
People are looking for houses that are more energy conscious, houses that are easier to maintain, such as cedar homes, timber frame homes and post and beam homes.
ECCM estimated an up to 88% reduction of greenhouse gases when more timber was introduced into the construction rather than other conventional building materials.
Modern Custom Cedar Homes Provide a Cost-Efficient, Eco-Green, Elegant Alternative They generally are built to a higher standard with superior craftsmanship and custom touches.
Because of this, custom cedar homes regularly appraise higher than comparably sized conventional homes.
Custom Cedar Home Benefits - Higher real estate resale values ...
green homes sell in less time and square foot for square foot, they have a higher resale value, up to 35 percent higher.
- Lower utility bills ...
15-20% more efficient than a conventional home.
Cedar timber has a natural insulation value significantly higher than concrete or brick, keeping you cooler in the summer and warmer in the winter.
- Lower maintenance costs ...
It has natural preservatives that deter both insects and decay.
- Extraordinary beauty and sound absorption qualities ...
making your home a quiet retreat.
It is also aromatic with the subtle, sweet fragrance of the forest.
- Superior craftsmanship and higher standards ...
designed to promote sustainable living, built with environmentally sound materials and custom touches.
Timeless beauty In our fast paced lives with mounting pressure and daily stress, a custom cedar home can be a nostalgic castle where you leave all of your worries behind to enjoy quality time with your family.
Fear vs.
Greed.
When real estate prices suffer losses for a sustained period, individuals become fearful of further losses.
However, being fearful leads to hesitation and hesitation based on emotion can become just as costly as being too greedy.
Let me explain ...
History has taught us how greed dominated the stock market rise during the dotcom boom and how quickly that greed turned to fear after its bust, evidenced by people switching to low-risk, low-return investments.
Did we learn from history? Since the stock market low on March 5, 2009 ...
the S&P 500 has rallied and produced a very respectable gain of approximately 50 percent.
We saw people, out of emotional fear sell low but are now scrambling to buy, but at higher prices.
We also saw the price of new houses rise by 300% and the price of raw land rise by 1,000% during the real estate boom of the 1980's.
Then the bottom fell out in 1992.
However, after hitting bottom, real estate prices increased to an annual rate of 25% and the price of land rose to an astounding 1,700%.
Can we learn from history and apply it to today's real estate market? Buying and selling decisions are more often motivated by people's fear or greed rather than logical thinking and a study of history.
Will logic help us find hidden value in a market that is presently down 30 to 50 percent? According to the Commerce Department - New home sales were up for the fourth straight month - Orders for durable goods were up 5% last month - U.
S.
consumer spending was up in July - Confidence among U.
S.
consumers was higher than forecast in August According to David Berson, chief economist for the PMI Group, residential construction and home sales led the way out of the previous seven recessions.
If we are too fearful to explore, are we missing an opportunity? Investing genius Warren Buffet famously wrote, "be fearful when others are greedy and be greedy only when others are fearful.
" When it comes to buying a home that you intend to live in for at least 10 years, there is little to no risk of losing money on your investment, even if the market continues to drop or remains stagnant a little longer.
Significant opportunities arise when things are negative President Dennis Lockhart of the Federal Reserve Bank in Atlanta said.
"Evidence is mounting that the worst of the economic downturn is behind us.
" The U.
S.
is expected to help lead the world out of its recession.
With interest rates near historic lows and the market heavily favoring buyers, it's practically a risk-free proposition.
Today's economy has provided the savvy buyer an opportunity to negotiate the best prices.
Now is a great time to go shopping - Building costs will never be lower - Mortgage interest rates are at an all time low - Inflation (or hyperinflation) is just around the corner ...
(At some point, we are going to have to pay for the stimulus spending) - Housing affordability is at its highest level in 18 years.
If you currently own land or building lot, now is the time to build a custom home.
You have an opportunity to get great deals on new construction.
Builders and subcontractors are presently motivated to negotiate a great price deal with you.
One clear favorite ...
Going green "Sustainable" and "renewable" materials are in high demand based on present trends, according to the American Institute of Architects (AIA).
People are looking for houses that are more energy conscious, houses that are easier to maintain, such as cedar homes, timber frame homes and post and beam homes.
ECCM estimated an up to 88% reduction of greenhouse gases when more timber was introduced into the construction rather than other conventional building materials.
Modern Custom Cedar Homes Provide a Cost-Efficient, Eco-Green, Elegant Alternative They generally are built to a higher standard with superior craftsmanship and custom touches.
Because of this, custom cedar homes regularly appraise higher than comparably sized conventional homes.
Custom Cedar Home Benefits - Higher real estate resale values ...
green homes sell in less time and square foot for square foot, they have a higher resale value, up to 35 percent higher.
- Lower utility bills ...
15-20% more efficient than a conventional home.
Cedar timber has a natural insulation value significantly higher than concrete or brick, keeping you cooler in the summer and warmer in the winter.
- Lower maintenance costs ...
It has natural preservatives that deter both insects and decay.
- Extraordinary beauty and sound absorption qualities ...
making your home a quiet retreat.
It is also aromatic with the subtle, sweet fragrance of the forest.
- Superior craftsmanship and higher standards ...
designed to promote sustainable living, built with environmentally sound materials and custom touches.
Timeless beauty In our fast paced lives with mounting pressure and daily stress, a custom cedar home can be a nostalgic castle where you leave all of your worries behind to enjoy quality time with your family.
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