For the past several years, we have continually heard that the fundamentals of real estate are improving. Whether it is a headline pointing out that mortgage delinquencies are down, or some other version of unbridled optimism, it has reached a fever pitch. Do people really believe that the more times they say it, the greater the likelihood it will come true?
Let’s be real. The word fundamentals (see dictionary.com) refers to an underlying foundation, and a good (or improving) one should presumably serve as a solid base on which to build. Do these pundits genuinely believe that the true current fundamentals are anything but soft ground?
Unfortunately, life is not a controlled environment and real estate does not exist within a bubble. It is heavily affected by the economy as a whole. What we are presently going through cannot be described as anything but the result of political risk. We have two divisive parties running this country, with one trying to reinvent the American way and the other unwilling to adapt to changing times. Taxes are rising, unemployment is hovering over eight percent, and consumer sentiment is declining.
Fundamentally, we are experiencing something worse than a downturn. A downturn can be identified as such. What we are experiencing is political, fiscal, and consumer uncertainty.
Until the ship is set back on course, we will be going in circles, hopefully not resulting in a downward vacuum.