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The real estate market and small business

This morning’s Wall Street Journal posted the following headlines on page A5: “Home prices Near Recession Low”. In the metro Phoenix Area it showed a decline in value of 8.4% from last year. This type of news will have an impact on small businesses. Consider the following:

  • With lower prices, small business owners who are relying on the equity in their home to help grow their business will not be able to get a home equity loan.
  • homeowners who have been holding on to their property in hopes of getting higher prices may sell their homes of abandon them. Such action will cause real estate values to continue their decline, or at least prevent price increases at least for another year. Those facing these tough decisions will stop spending except for necessary items.
  • The start of new construction has been an indicator for a recovery; without any signs of a real estate rebound, discretionary spending will be less and less.
  • Real Estate has also been a large employer; jobs are hard to find and it appears that the jobs we are currently creating are very low paying.

As always, you have to study the needs of the market place and position your business to cater to those needs. I am keeping my fingers crossed  the start of a real estate recovery sometime in 2012, but our overall economy still does not have the leadership needed to change our stagnant growth.

On the positive side, this is one of the best investment opportunities I have seen in my many years as a Real Estate Broker. Our office just sold a home in Mesa to a cash buyer for $35,000. The last sales price on that home was $189,000. If you have the available funds, consider investing.

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Have a great day!

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