Question

Author Walt Huber suggests in chapter one that “Real Estate values throughout California” were reduced unevenly due to the “Financial Crisis” and the “Great Recession”. California’s population “growth rate” is expected to equal or surpass that of the national average in the next decade. He also suggests that a home is an expensive venture that includes a home loan payment. This payment usually equals to 28% of the wages earned monthly by homeowner, although this percentage may be higher in California. The monthly payment is only part of owning a home. Property taxes, fire insurance, repairs, and furnishings are expenses that will further increase monthly cost of maintaining home.

After reading the introductory chapter author defines how in California when the real estate market values are continually adjusting in the aftermath of the financial crisis do you see “Real Estate as a profitable profession”?

Answer 1

The main question that arises here is even though real estate is a lucrative profession , is it proper to take up this profession after the financial crisis when the housing market is low. It is seen that sales of homes saw a decline from 4.34 million in 2009 to 4.19 million in 2010.But in 2011 it again rose slightly to 4.26 million according to the National Association of Realtors.The market has eased out a little but risk still prevails.The subprime mortgage business is still in problem because too much loan was given by the lenders to homeowners who are now not able to make the payments. There is a huge number of unsold houses in the market which are not fetching remunerative prices .The falling prices make it difficult for real estate agents to finalise their deals as house owners are reluctant to dispose off their properties at a reduced value.So houses don't sell and it has become difficult for real estate agents.A owner of real estate brokerage in Northern California says that when the market is challenging , it is necessary requirement to have enough matured business skills which can be applied always in business for success.A California real estate consulting firm is of the opinion that many people in such kind of market do not have the expertise to sell their product. Only with experience ,agents will be able make out how buyers and sellers relate in such a market. In such a challenging market, the real estate agent should have enough business skills and specialise to make himself distinguished in the down market competition.So we see that it is easy and lucrative to enter the real estate profession but it is difficult to sustain it in such down market situation.