Life, Confidence; and the Real Estate Market

Nick Churton, the managing partner of Mayfair International Realty—our exclusive brokerage partner throughout the U.K.—contributed an interesting op-ed piece to the London media last week.

Founded in 1995, Mayfair International Realty now represents 350 geographically dispersed real estate offices throughout England, Northern Ireland, The Republic of Ireland, Scotland and Wales. Its main office is located in the exclusive Mayfair section of London, a few short steps from Grosvenor Square and the United States Embassy.

Here’s what Nick had to say:

LIFE, CONFIDENCE; AND THE
REAL ESTATE MARKET

By
Nick Churton

The start of this fresh year is a good time to reflect on the turbulent months behind us in the real estate market, and to look ahead. It is surprising how similar the US real estate market is to that of many European countries right now. But perhaps this year we ought to think twice about trying to second-guess the future.

It is fair to say that we have endured a year of rollercoaster news and extraordinary financial events, with the banking system turning cartwheels and the real estate market suffering one of the harshest periods of trading for over half a century. Many of us in the real estate industry will be relieved that 2008 is over.

The media in the US and Europe seems to be full of ‘expert’ opinions about falling real estate values, when the market will turn and how long any period of recovery will take. From newspaper and broadcast journalists to eminent economists, they all have something to say. The trouble is few seem to agree. This is hardly surprising as none of them is a clairvoyant and none has ever encountered this sort of crisis before. So, no matter how expert anyone thinks they are, nobody really knows. With so many people conjecturing different things (and by the law of averages one of them will eventually be right) forecasting appears to be a rather fruitless exercise.

But we local real estate experts do know a thing or two. We know what is going on in our particular market place. We know we are still agreeing sales and, whilst it is fair to say that prices need to be realistic, buyers are returning to the fray. There has certainly been an upsurge in activity following dramatic interest rate cuts on both sides of the Atlantic, and we think this will increase with further rate cuts as banks slowly relax their stranglehold on mortgage money. Also, no matter how eroded confidence is across the real estate and financial worlds, people do still leave the family nest, co-habit, get married, give birth, separate, divorce, get new jobs, lose their jobs, win the lottery, hit the jackpot and, sadly, die. Despite low property transaction volumes there is still movement. There always is.

So now is the time to look forward, perhaps with just a little more optimism than in recent months. Low interest rates will attract buyers, turmoil in financial markets may just turn investors back to the safety of real estate, money will need to be lent to ensure the banking system begins to move again and, most importantly, life and the real estate market will go on.

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