Is the Real Estate Market About to Collapse? . . . Can A Developer Avoid the Business Cycle?

Always ready to pass their wisdom onto the millions of listeners who hang onto their every word,  Adam and Jeff discuss how the the real estate market and, indeed, the economy as whole, goes through 7-10 year business cycles over and over again.  Jeff points out that lower interest rates do not necessarily lead to better deals because crafty buyers simply raise the prices of their real estate properties accordingly.  The problem with the proliferation of new apartment buildings throughout the country is that they are so expensive to build that the average family has no hope of affording the monthly rents.  Adam and Jeff suggest that this overbuilding is no different than overbuilding in the past because major real estate projects take so many years to design, permit, and construct.  Adam points out that developers have resorted to requiring condo buyers to put half of the purchase price down ahead of time because the banks do not want to finance real estate construction any more.  As a result, the  builders are able to use buyer deposits to construct the buildings.  If things go bad, then the prospective condo buyers--not the banks--will be the ones who suffer the loss.