There Are 3 Types Of Real Estate Markets And Each One Dramatically Affects The U.S. Economy And Consumers’ Ability To Borrow Money.

It is extremely important for home buyers, home sellers, real estate licensees, mortgage licensees, attorneys, builders, and other miscellaneous servicing company personnel who are involved in the entire home buying, home selling, and lending processes to have a proper and thorough understanding of what the 3 different types of real estate markets are and what causes them to exist. The reason is it will clear up many of the traditional misunderstandings and misconceptions about them. Now here are the 3 different types of real estate markets I am referring to.

Definition Of A Buyer’s Market

A Buyer’s Market favors home buyers and it is caused as a result of Supply exceeding Demand. Simply stated there are more home sellers than there are home buyers. In this type of market real estate values will decrease which is referred to as depreciation. An example of a Buyer’s Market, which by the way is the strongest in US history, is the one that has developed since the year 2004. 

Definition Of A Seller’s Market

A Seller’s Market favors home sellers and it is caused as a result of Demand exceeding Supply. Simply stated there are more home buyers than there are home sellers. In this type of market real estate values will increase which is referred to as appreciation. An example of a Seller’s Market, which by the way is the strongest in US history, is the one that existed between the years 1998 to 2004.

Definition Of A Level Market

A Level Market favors neither, home buyers or home sellers and it is caused as a result of Demand equaling Supply. Simply stated there are about as many home buyers as there are home sellers. In this type of market real estate values will level. An example of a Level Market is the year 2005 which came between the strongest Seller’s Market in U.S. history and the strongest Buyer’s Market in U.S. history.

Definition Of The Terms Bubble And Bubble Bursting

A Level Market can begin at either the end of a Seller’s Market where there has been an increase in real estate values or the end of a Buyer’s Market where there has been a decrease in real estate values. At the end of a Level Market a Bubble develops. This Bubble (like a balloon) develops as a result of pressure (like air being forced into a balloon) caused from either an increase, decrease, or leveling of some or all of the 6 Fundamentals Of The U. S. Economy. At some point, because of this building pressure, the Bubble eventually bursts just like a balloon.  If the Bubble bursts in an upwards direction it’s the start of a Seller’s Market. If the Bubble bursts in a downwards direction it’s the start of a Buyer’s Market.

Real Estate And Mortgage Licensees Should Consistently Perform Their Various Procedures

Real estate and mortgage licensees would be very smart to consistently perform their various listing, selling, managing, and lending Procedures (job functions) the same way and in the same time frame regardless of whether they are in a Seller’s Market, Buyer’s Market, or a Level Market. Why? The reason is when they consistently perform all of their various Procedures the same way and in the same time frame, regardless of market conditions, they will dramatically decrease their odds of having to make substantial psychological and financial adjustments when the real estate market changes. Having to make psychological and financial adjustments, when a real estate market changes, is an extremely difficult task for most real estate and mortgage licensees to make. This is especially true when the real estate market changes from a Seller’s Market into a Buyer’s market.  

Real Estate And Mortgage Licensees Could Have Avoided Major Financial And Psychological Adjustments

The best example in U. S. history as to when real estate licensees and mortgage licensees had to make substantial psychological and financial adjustments, which could have been totally avoided, is when many of them became extremely lazy during the strongest Seller’s Market of all time which ran from the years 1998 to 2004. Why did they become extremely lazy during this period of time? Because the Economy Fairy, who created the strongest Seller’s Market of all time, enabled virtually all real estate and mortgage licensees whether functioning in a full time, part time, or referral capacity, to make a lot of money. However when the Economy Fairy left earth around the end of 2004 or early 2005 the real estate market significantly changed, into the strongest Buyer’s Market of all time. As a result real estate and mortgage licensees, many of which had become extremely lazy, now had to make substantial psychological and financial adjustments in order to both survive and succeed. Had they just consistently performed all of their various listing, selling, managing, and lending Procedures during the strong Seller’s Market of 1998 to 2004 then they would not have had to make such substantial psychological and financial adjustments after the strongest Buyer’s Market in U. S. history developed.           

As a result of becoming extremely lazy during the existence of the strongest Seller’s market in U. S. history thousands and thousands of real estate and mortgage licensees have now found it much too difficult to make the necessary psychological and financial adjustments they need to in order to survive and succeed as a result of the birth and continuation of the strongest Buyer’s Market in U. S. history. Because many real estate and mortgage licensees have failed to make these necessary adjustments they have now become extremely psychologically and financially depressed. Because many real estate and mortgage licensees have failed to make these necessary adjustments it is also true that they have now left the real estate and lending industries as well.

The Lesson to be learned here is that real estate licensees and mortgage licensees should learn to discipline themselves to consistently perform all of their various listing, selling, managing, and lending Procedures the same way and in the same time frame regardless of the type of real estate market they are in. Accomplishing this will enable them to maintain their maximum level of proficiency, professionalism, productivity, and success at all times.

Respectfully, Phil Mitsch

America's Economic, Real Estate, Lending And Motivational Coach
Real Estate Industry's All Time Top Producing Residential Realtor
2011 New Jersey State Senate Candidate

Cherry Hill, New Jersey
856-665-6569
http://PhilMitschForAmerica.com
philmitsch@verizon.net                   

Special Notes

The above article is an excerpt from Phil Mitsch’s How To Have A Successful Selling Attitude Book. This book is the first of 14 books that comprise his Real Estate Selling Agent Training system. 

Phil Mitsch has over  6000 1) U.S. Economic Crisis Solutions, 2) Home Buyer, 3) Home Seller, 4) Real Estate Professional, 5) Mortgage Professional, and 6) Life Lesson Tips that can be found in his 70 Books that comprise his 8 Training Systems.  These Systems can be found at http://PhilMitschForAmerica.com.