I’ve always enjoyed following the financial markets. Ever since I was a kid I would dive in to books by the likes of Peter Lynch and Warren Buffett. There is saying in the financial and investing world “flight to quality”.
A flight-to-quality is a stock market phenomenon occurring when investors sell what they perceive to be higher-risk investments and purchase safer investments….investors seek less risk in exchange for lower profits. (Wikipedia)
I have found that this has been ocuring in our condo market for quite some time. Leading up to the actual bubble bursting in the US real estate market, investors felt that we could do anything. We purchased first homes, second homes and investments homes at the drop of a hat. In the condo market when I was working with UrbanCondominiums.com, people would fly in from all over the world to buy a Seattle condominium. Our development community had visions of grandeur. Anything could be built and everything could be sold. So what happened?
Since coming out of the recession, it has been quite clear. Buyers are taking a much more conservative approach. They are taking their time to indentify the right place instead of purchasing for “profit”. This is the Seattle condo “flight to quality” that I speak of. The downturn in the market has created unique opportunities for buyers of all walks of life to purchase great units in phenomenal buildings at below market rates. In fact, most of the clients that I’m working with prefer the like new product that still has a great reputation. Fundamentally it makes sense. As consumers we are gravitating towards more secure purchases. I’d be curious to get your opinion. Feel free to comment and interject as you wish.