Although many people have a general understanding of real estate, not many of us actually can define what real estate is, or what actually happens in the real estate market. All we know is that the real estate market is all about mortgages. Well, this is not very wrong, because for some of us that is all we think we should know. But it helps to understand the basics of real estate. The real estate market is about more than just mortgages and rent. Your Personal Financial Mentor gives you the basic understanding of real estate, with some other details you probably ignore
The term real estate actually refers to property that includes land and buildings on it, including everything else on the land; natural resources lakes, rivers, etcetera. The real estate market can therefore be loosely defined as the market of selling and buying land of property on that land. In some places like Britain the term real estate is used interchangeably with property, where the real estate market is variously called the property market.
Real estate is not just a term used in business and finance. In many countries, the term real estate is a legal term used to refer to land and resources on the land. In many legal cases, the term ‘estate’ is used to refer a person’s entire property, including his bank accounts and everything he owns.
The real estate market, in this case referring to the business of selling and buying homes, has become a booming business over the last century, with many investors building homes then selling them out. Every growing economy has a story of a booming real estate market. Perhaps this is because economic growth is mainly centred in urban areas, but there are many reasons for that too.
What has been witnessed in the last few years is that whenever there is an economic recession, the real estate market is usually the worst hit by the recession. The main reason is that economic recessions mean that there is a lot of unemployment in that country, and that people find it more difficult to pay their mortgages, resulting in huge losses for the companies.
Home foreclosures are very common during times of recession, because once you fail to pay your mortgage; your home is taken away from to pay back your loan.
Categories: Real Estate