Presented By Vladimir Jean, Real Estate Professional and Investor FIN 310 Dr Maggie Foley Presented By Vladimir Jean, Real Estate Professional and Investor The Real Estate Market

1. Real Estate Market Crisis-2007-2009 2. Real Estate Market Now-2017 3. The Future of the Real Estate Market

Financial crisis of 2007–08 Real Estate Market  What happened and how did it affect the global economy

The financial crisis of 2007–09, also known as the global financial crisis and the 2008-09 financial crisis, is considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.

What was one of the MAIN causes of this financial crisis?

The Real Estate Market!

The bursting of the U.S. housing bubble, which peaked in 2004,caused the values of securities tied to U.S. real estate pricing to plummet, damaging financial institutions globally.

What really triggered this financial crisis?

 The financial crisis was triggered by a complex interplay of policies that encouraged home ownership, providing easier access to loans for subprime borrowers, overvaluation of bundled subprime mortgages based on the theory that housing prices would continue to escalate.

Also, questionable trading practices on behalf of both buyers and sellers, compensation structures that prioritize short-term deal flow over long-term value creation, and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.

As a results of such unethical and unprofessional behavior by these entities, mainly, mortgage brokers and bankers, many people had lost their homes, Jobs and their businesses.

7 million Americans lost their homes during the recession.

How is this financial crisis has affected the global economy? j

The  global financial crisis has seen the largest and sharpest drop in global  economic activity of the modern era. In 2009, most major developed economies find  themselves in a deep recession. The fallout for global trade, both for volumes and the pattern  of trade has been dramatic.

Financial institutions in developing countries were negatively affected on the extent to which they hold assets contaminated by subprime mortgages. In China, where the financial sector is largely government controlled, exposure to subprime mortgages of United States origin was limited. There was, however, a more serious indirect threat through declines in stock market prices and housing prices.

Reduction in export earnings

Most developing countries were spared significantly with damages to their financial systems, the fact that the advanced economies were in recession really hurt them. The impact was significant, given that most developing countries have been basing their economic growth in recent years on exports. The International Monetary Fund (IMF) expected to growth in world trade to decline from 9.4 per cent in 2006 to 2.1 per cent in 2009. The expected declines comes through a combination of lower commodity prices, a reduction in demand for their goods from advanced economies and less tourism.

Reduction in financial flows

Financial inflows from the rest of the world to developing countries include official development assistance (ODA), investment flows - both portfolio and foreign direct investment (FDI), trade credits and flows of remittances. All of these were affected negatively during the current crisis. Also, put the decline in financial resources to developing countries from around US$300 – 400 billion. 

Some countries managed to escape a downturn or, at worst, had only a small and brief decline. Argentina, India, Indonesia, the Philippines, Tunisia, Israel and Jordan are in that group. Poland’s economy, unlike those of its Eastern European neighbors, has regained more than it lost in its shallow downturn.

Developed countries with robust natural resources sectors also fared well. Australia performed better than any other major industrialized economy; its G.D.P. fell less than 1 percent even at the worst of the crisis. Canada did experience a recession, but it has recovered nearly all of what was lost.

Countries that were least affected

Real Estate Market Now-2017

The National Association of Realtors reported that the median price in April hit $246,100, which is 6.8% above the peak of Housing Bubble ($230,400 in June 2006). Low mortgage rates are keeping the market affordable from a monthly perspective, but affordability will likely become a much bigger challenge in the coming years. 378,000 new apartment units are expected to come online in 2017 across the U.S. Foreign all-cash buyers have elevated high-end home prices beyond local economy’s price ranges The economy is solid, trade deals look okay, new construction is active, new commercial buildings on the rise bringing more Jobs.

The Future of the Real Estate Market

The global investable real estate universe will expand substantially, leading to a huge expansion in opportunity, especially in emerging economies. But expect the market to shift, but which direction?

Will the Real Market Crash Again?

Thank You! Any Questions?