This is installment #4 of our Foreclosure Lessons. This far we have been over interest rates, inflation, and flow of investment funds. Now, we are going to learn about the Business Cycle of Real Estate and how it affects the Real Estate Market and Foreclosures.

The National Economy rises and falls in cycles - so does Real Estate. As our economy goes from recession to prosperity, investments are influenced. So let's define America's economic cycles.

When economy is strong, incomes are high, unemployment is low, and people tend to have more discretionary income to invest in Real Estate.

When economy is weak, incomes are lower, unemployment is higher, resulting in fewer Real Estate purchases, higher foreclosure rates, more renters and lower property values.

Both of these cycles are a great time to invest in Real Estate. Its just a matter of HOW you are going to invest in Real Estate.

Researching the state of the economy is best served by reading things like The Wall Street Journal, Fortune Money, CNNMoney, and USA Today. Of course you can always Google or Digg information on our Economy. This is information you need to keep up with fairly consistently. I suggest reading up on the status of the Economy nightly right before or after dinner and keep up to date. Again, its just one of the factors, and the local factors will be more important, but we will get to those in a later installment of our Foreclosure Lessons.

Foreclosure Lesson #5

This is the last installment describing the National Factors affecting foreclosures and the Real Estate Market. We have now discussed interest rates, inflation, flow of investment funds, and the business cycle. We are now down to the last National Factor affecting Real Estate. This factor is the easiest to comprehend, yet the most emotional. It is cataclysmic events.

A cataclysmic event is something like Hurricane Katrina. It is a naturally occurring event that devastates an area. During cataclysmic events, building prices are likely to go up, resulting in higher real estate prices. Of course there are others, tornadoes, hurricanes, earthquakes, mudslides, forest fires, etc.

Luckily, we don't have to deal with events like this every often, but it is something to be aware of as you are buying and selling homes in different areas. Ask your self key questions. Is this area prone to cataclysmic events? Was their one recently? How is it effecting building prices, remodeling, etc? Are most people just walking away, or are they rebuilding? Do you even want to deal with the whole emotional aspect of buying and selling in areas that have been hit by events like this? And of course, will you make a profit or are you doing this to help people in general?

The National Factors that Affect Foreclosures and Real Estate

There are five national factors. They are:

1. Interest Rates

2. Inflation

3. Flow of Investment Funds

4. The Business Cycle

5. Cataclysmic Events

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