Real Estate Solutions and New Problems

Real estate investments and careers have exhibited an uncomfortable amount of volatility and problems during the past five to eight years. This has been very visible because there is extensive personal involvement through home ownership as well as business ownership and various real estate careers. Whenever there are negative periods such as those seen recently in real property, it is only natural to wonder when it will all end. To raise the stakes even further, real estate represents a massive portion of the overall economy in many countries worldwide.

As with many other circumstances, problems cannot be ignored but nevertheless represent potential opportunities. Another similarity to general problems is that the most serious real estate problems keep recurring. Some of the most expensive difficulties will generally occur when individuals do not learn from previous mistakes. This kind of failure contributes to similar problems rearing their head again and again. For both real estate investing and career planning, mistakes and problems are inevitable and must be properly managed and resolved.

Effective and practical real estate solutions will always be in demand, and this is even more true during periods of extreme uncertainty such as during the period that started around 2004 to 2008. There might be some disagreement about when real estate started to exhibit worrisome symptoms, and there have been some regional differences as well as variations between residential and commercial real estate that have contributed to differing opinions as to when these initial signals of trouble went from bad to worse. To some extent, the various pieces fell like a domino once it became more obvious that there was a financial crisis in 2008.

If there is in fact a "patient zero" in the recent real estate crisis, it would probably be the manner in which banks took excessive risks involving real estate derivatives and real estate lending without adequate documentation of creditworthiness. It was excessive financial losses due to derivatives which primarily precipitated the need to bailout banks in 2008. This in turn led to banks putting on the brakes for small business loans which led to a variety of other problems for small businesses that include declining commercial real estate values.

Among the most serious new problems that require effective solutions for both individuals and small business owners is how much lasting change has taken place in the banking industry. This is not likely to be temporary in nature as a candid assessment of banks indicates that they realistically appear to be forever changed. Whether someone is contemplating either a real estate career or investment, it would be prudent to anticipate that the same old answers no longer apply.