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  • Risk Management for Real Estate Firms

    Game Plan

    In-Depth

    Market and Economic Fluctuations

    The cyclical nature of real estate is legendary. Prices and values change constantly, affected by global, national, and local economic activity, the availability of credit, and mortgage interest rates.

    Changing demographics keep real estate trends in flux too. The 78 million aging baby boomers, many of whom may be moving into smaller homes, coupled with a lower demand for home ownership expressed by many millennials, could have profound effects on supply and demand in real estate markets.

    Mitigation Measures

    • Stay on top of your local market conditions and be agile enough to adapt to changes. You may need to spend more money and ramp up marketing efforts during down cycles to position yourself for success when markets inevitably turn around.
    • Study demographic trends to determine if you need additional training in specialty areas that may allow you to broaden your expertise and scope of business. For example, if residential activity is slow in your area, you may want to branch out into commercial ventures.