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Unformatted text preview: . Professional Standards – The real estate industry began long strides toward professionalization, especially in the areas of property valuation and management. Lenders began demanding professional management of properties they acquired through foreclosures and defaults. HOUSING CYCLES
Unfortunately, the housing cycle is irregular and wild, with great booms followed by falls. Several “boom times” in real estate occurred in the early 1960s, 1971–1973,
1975–1979, 1982–89, and the late 1990s and early 2000-2002s. However, between these periods were some bad years–1966, 1969, 1974, 1980–1981, and a severe housing crash from 1990 to 1996 in many parts of California. What causes a bust in the real estate market? Things such as high interest rates, government deficits, and better investment opportunities can cause what is known as disintermediation, which is the sudden flow of funds out of thrift institutions (which grant real estate loans) into the general money market (where real estate loans are not common). This drying up of real estate funds raises havoc in the housing market. In short, real estate activity is directly tied to the availability and cost of mortgage funds
Dynasty School (www.dynastySchool.com) 1-3 REAL ESTATE FINANCE
and to the general state of the economy. As these two items shift up and down, so goes the real estate market. Therefore, an agent's or an investor's success in real estate partially depends on a thorough understanding of trends in the mortgage market. The remainder of this book is devoted to an explanation of real estate finance, including the wide range of creative and alternative financing techniques used in buying and selling real estate. RECENT DEVELOPMENTS
Changes in the real estate market beginning in the 1970's and continuing into the 2000's have prompted an increasingly businesslike approach to financing. Appraisal – Appraisal techniques for property valuation have become exceedingly sophisticated. Alternative Financing – An i...
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- Spring '10