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Winter Season Has Arrived November 20, 2009

Posted by John Watch in Uncategorized.

For the past several weeks, we have placed any new posts.  Why?

As we discussed during the summer months, Real Estate is Cyclical, Seasonal and Emotional, and yes it seems that the analysts have not learned this key element about the human psyche.

As we enter the winter months, southern sections of the country should continue to experience some recovery, but the “Snow Bird” states of Arizona, Florida and Nevada will experience limited recovery because the migration from the Northeast will be off.

For the past five years these areas were counting on retirees to acquire a second residence or even move to their communities to retire.  Given that 70% of all people remain in the area in which they were born, this planned shift does not correlate to the rapid growth in new construction from these areas.

So until the population grows and home absorption occurs through natural cycles, Florida, Arizona and Nevada will continue to struggle.  California has an entirely different set of complex economic issues affecting ownership.

So with that said, the Winter months are traditionally the slowest months.  Just like the recent crisis in valuation, one must remember that unless you have to sell, you will not sell.  As such, the slowdown in new construction activity is not a surprise.  The decline in Median Sales price is not a surprise and the temporary slowdown in the recovery of the real estate markets is not a surprise.

So why are all of the analysts surprised?



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