The Effect of Real Estate on the Economy part 4

~ Lou Farris, MBA, Realtor®, CDPE®

In the past three articles, we have waded through all of the turmoil, and economic headaches a flagging economy can cause. We took a look in a previous series about all of the various terms batted about in the press to describe our economy. There is so much more that can be covered, but doing so would require me to set up a classroom for a few months to more fully explore it. I wish it was possible to do so here. I also don’t have a team of staff writers and researchers available to look up all of the information and then condense it. My hope, as always is that what I present for you is thought provoking, and that the information is useful to you.

That brings us to the conclusion of this series. As I read and research and find things that help me write these articles, there is always a bittersweet moment. I’m over it, but there is a point where you both dread and look forward to closing out a series of articles. There is the elation and relief of completing the task, and the fleeting thought of now that this is done, what else can I write about?

I’m sorry for the long intro here, and without further delay will attempt o briefly summarize the other side of the economic coin, as it relates to real estate.

Healthy real estate markets experience appreciation, first and foremost. Though there will always be foreclosures, for a variety of reasons, they will not appear at the rate they have been over the past few years. The purchase of properties will improve the appreciation rate, and this will show in the amount of goods purchased from the local building supply stores, and the numbers of diners in local restaurants increases. One of the reasons for this is that in healthier economies, people have more disposable income. as cash flows thought the neighborhood, and properties are improved, those neighborhoods become more desirable to live in.

Crime rates tend to decrease in neighborhoods, whenever there is a drop in foreclosures and an improvement in the economy of the neighborhood. Since there are fewer abandoned or derelict homes, there are fewer opportunities for adverse activities to occur. because activity of the homeowners increases. he tax base improves and the amenities can also improve.

It is great to see a neighborhood turn around, and see people enjoying the benefits of home ownership. Where the paint was chipped, there is new paint, and the interiors get a facelift. Where there were dormant, empty homes, now there are lights in the evenings, and the sounds of laughter. The ice cream trucks roll through again, and people are out tending their yards and planting flowers. What used to be a grey and dingy area, now there are colors and brightness. Neighbors who have been weathering blight now have their neighborhoods back healthy again.

When property values improve, businesses begin planning to place new locations in the areas. With homeowner improvements the local retail areas begin perking up and start their own window dressings. Then , come more venues for entertainment and recreation. This creates a micro economy in the neighborhood that maintains the vibrancy of the neighborhood. when people enjoy living where they do, they are apt to find things to do in their neighborhood for recreation and diversion. Funding for schools also increases, because they receive funds for education on a per capita basis. Since more families are coming in, and more children are attending as a result of the census, the school receives more funding.

neighborhoods go through various cycles, and stages, and mature a lot like people. When mortgages can be paid, and some are paid off, neighborhoods stabilized and take on a life like the people who occupy them. When they are healthy, they are like a healthy person. The thing that is so much fun about being a Realtor® is being able to participate in preserving or restoring the health and vitality of neighborhood. That, for me is the very best thing about participating in a great profession.

The mortgage markets may have cause d a lot of problems, and may have spurred the current crisis on. We are still not past all of the rough ride ahead, but there are a number of people I am sure who believe with the passion I feel for the market, that we will be able to make a positive difference in the lives of people and the neighborhoods they live in.

Stay tuned! I have another project in the works and look forward to a holiday surprise to share with you on Christmas Eve. Happy Holidays!

– Lou

In this series, the kudos go to the following for the material that aided my research: Google® Images for the pictures that made these headlines, The Bureau of Labor Statistices, The CIA World Fact Book, The Internal Revenue Service, The National Association of Realtors®, The Federal Reserve Bank (New York and Kansas Districts) The Federal Deposit Insurance Corporation, The National Association of Mortgage Bankers, Forbes Magazine, The Wall Street Journal, Metrolict®, and Hallie Ruth Jackson.