Real estate: Trick or Treat?

07 Oct

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In a previous article, I told you we were in a seller’s market. But where are we heading? Even though there is still a lack of homes for sale, the mortgage rates are, slowly but surely, going up. As a consequence buyers could become scarcer. Here’s a look at four items to better understand the rebound of the housing market at a national level.

First of all, the real estate market shifted in a short amount of time. In a regular market, prices increase after the inventory of houses for sale shrinks. In this unusual recovery, things went the other way around. Without shrinkage of inventory, developers decided to increase prices. They actually even admitted they pushed prices too far. For instance, when you compare the new home orders year-over-year, the demand only increased 1% in August against 11% in July. Nowadays, purchasers are more thoughtful before investing in a condo.

Then the demand of homes still exceeds the supply. As a consequence, the lack of inventory doesn’t allow prices to decrease. In addition, buyers are looking for the right house to enjoy it for a long time. So they are willing on waiting if nothing is available now.

On the other hand, the market has also cooled off. At the beginning of the year, purchasers were acting unreasonably and thoughts of another bubble were proliferating. That trend had damaged the relationship between home prices and incomes. To give you an idea, whereas home prices had increased of roughly 12% a year, incomes had only grown at a rate of 1%. The market couldn’t sustain much longer this gap.

Finally, any mid-term improvement in housing will depend on a few socio-economical questions:

–          Will the mortgage rates continue to increase?

–          How will the unemployment rate evolve?

–          Which type of jobs (high-paid or part-time) will be created and will they have a sufficient impact on the housing market?

To conclude, becoming a real estate buyer nowadays is obviously still possible. If you want to have tips, check out this article .

1 Comment

Posted by on October 7, 2013 in News


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One response to “Real estate: Trick or Treat?

  1. DK

    May 7, 2014 at 8:41 am

    There are also other questions regarding quick development and new investors including landlord and tenant relationships. I came across this blog on and wonder about the new developments’ overall effect on the economy and the investor.


    Your boyfriend better be in town

    In notoriously pro-tenant state people rarely think about the abuses that commercial tenants perpetuate upon their landlords for the love of turning a quick buck. While commercial tenants come and go, landlords stay and are bound to clean up their tenants’ mess.

    Enter Bâoli, a glitzy, pretentious, and an unnecessarily pricy French transplant from Cannes. Bâoli planted itself in Miami Beach and bestowed upon its landlord such headaches that caused a suit for eviction and damages.

    Proselytizing Bâoli’s Wednesday nights as “My boyfriend is out of town” parties, the restaurant lures patrons into an environment plagued by building code violations, fire code violations, and noise complaints. “So what,” you ask “Patrons are just coming to have fun.” Would patrons still feel “having fun” by walking into a virtual death trap?

    When the City charged Bâoli with fire violations regarding the CO2 tanks, open flames, lack of emergency lighting, lack of and improperly maintained fire extinguishers, and obstructed means to exit the restaurant, to name but a very few, it should have been a wake-up call for Bâoli and for its patrons. And patrons should care, because their life may just depend on the safety of Bâoli’s premises.

    When Bâoli tenant improvised without permit an ad hoc walk-in refrigerator on the second floor of the restaurant building, it is anyone’s guess when the structure will crash through the floor onto someone below. Remarkably, the City fined the landlord for Bâoli’s failure to remove the offending structure, even though Bâoli stubbornly refused to even allow landlord to enter the premises.

    When Bâoli tenant contrived two air conditioning units and enclosure walls without permits on the premises, the City slammed the landlord with a $140,000.00 fine.

    “What about Bâoli’s insurance?” you ask. Excellent question. Bâoli’s landlord demanded time and again for proof of insurance within the limits set by the lease, and received a terse French “zéro” in response.

    While Bâoli’s practices may not necessarily be indicative of the practices of every commercial tenant, the legislators and the courts have to be tougher on violators. It is rather unfortunate that some commercial tenants make their insolent attitude towards our laws and ordinances a matter of their business judgment. At the end of the day our local community will pay the ultimate price, when it will spend time, money, and energy to defy the kind of unscrupulous practices that undermine the safety of the very marketplace from which commercial tenants derive their profits.


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