Overview - Factors Affecting Real Estate Sales

Every market has a different reason as to why its real estate sales/prices trend up or down, and to what degree of variance they do so as compared to the national "average".

The factors that cause good or bad sales in, say Topeka, are not all the same as those here on Marco Island.

There are some national and even international factors that to some degree affect all markets. For example, interest rates MAY affect all markets, and a substantial international incident may affect all U.S. markets as well.

However, the extent to which these national/international factors affect a specific market, as say Marco Island, is more arbitrary than science. Namely, adverse national implications do not necessarily universally affect local markets.

As an example, a slight increase in interest rates may affect a predominantly working community adversely due to the amount of disposable income by the citizens of that community or those looking to migrate to that community. However, the same slight increase will not, as has been shown by myriad studies, unfavorably affect the affluent or “upper middle class” real estate markets given the amount of disposable income (as but one factor) of the citizens looking to invest in those communities.

As some of these discussions have played out, it is easy to blame local factors, such as real estate agents that have been nothing but order takers. However, it is significantly more erroneous to blame “interest rates” and “real estate is slumping everywhere” for the flat or dropping sales on Marco Island. Again, national factors may not, and historically substantiated by study after study, don’t always apply.

More examples. The real estate crash of California in the late 1980s. No other part of the country experienced such a drop. The factors for that buying back of America for 10 cents on the dollar were nearly all local. And recently, clearly can anyone blame interest rates for what is presently occurring or not occurring in the gulf cost areas that were devastated by hurricane Katrina?

Economics, beyond being a “dismal science” is nearly all formulated with common sense. Like the laws of physics applying to all of nature (except the sub-atomic world), economics applies to real estate. Within those controlling forces of national and global economies are the direct consequences of selling. Namely, if one can sell, it almost does not matter how the economy is doing.

Skeptical? Look at Microsoft. A near monopoly, with products that lay people deride and professionals know to be poor at best, is a huge success. Why? Because regardless of the “economy” and what people are saying about them, they can sell.

Selling. It’s the factor here. We have the sun, and the fun, and the quality of life (until the few on the council want to commercialize every square inch) and great rumors (like the Calusa Indian hex – or was it hoax?). We can blame the interest rates and the economy and the non-prophetic Indians and the hurricanes and the city council and the city manager and everything under the sun. But in the end, selling is king.