Globalization of real estate finance is industry wild card.Looking forward, the true "wild card in real estate is the globalization globalization Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation of real estate finance. Securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. financing is becoming increasingly dominant in the real estate investment industry, and this trend is already adding a global dimension to what are considered "the fundamentals." In the past, to evaluate a given asset within its immediate real estate market was enough. With securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. , however, a building is transformed into internationally traded paper - and the rate at which it trades has less to do with a specific real estate market and more to do with international financial markets. Securitization means that events in Russia and Thailand may impact the price and availability of money for an office building in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . As a result, real estate values no longer move solely with the local economy, but also with the world economy. In the last mortgage market crash, during August 1998, many participants in the real estate investment market consoled themselves by saying "at least the fundamentals are sound." These words may have been true in terms of supply and demand for real estate, but ignored one critical element: purchasing power Purchasing Power 1. The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you'd be able to purchase. 2. . The ability of investors to acquire real estate is a function of the price of money, and when today's international capital markets are influx, money for real estate transactions becomes more expensive. In essence, by bringing real estate into the capital markets, you are overlaying o·ver·lay 1 tr.v. o·ver·laid , o·ver·lay·ing, o·ver·lays 1. To lay or spread over or on. 2. a. the long cycles of real estate markets with the short cycles of capital markets, which has the potential to create chaos. These changes in the world of real estate finance require those active in the marketplace, whether investors, brokers, financiers or appraisers, to be alert to global market trends, as well as local market dynamics, because international money trends now directly affect the supply of dollars for real estate transactions. |
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