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  • Einstein's Theory of Relativity as it applies to real estate

    Tuesday, March 7, 2023   /   by Amy Brown

    Einstein's Theory of Relativity as it applies to real estate

    In 1905, Albert Einstein, developed his Theory of Relativity. This groundbreaking piece of work changed how we think and perceive the world around us, overturning centuries of accepted scientific thinking.


    My favorite analogy for the theory comes from the man himself:

    "When you sit with a nice girl for two hours you think it’s only a minute, but when you sit on a hot stove for a minute you think it’s two hours. That’s relativity."- Albert Einstein

    The theory of relativity also applies to real estate market behavior.

    Relativity applies to real estate relating to the behavior of home values vs. interest rates and how that affects a buyer's ability to buy and a seller's ability to sell. 

    Many would-be entries into the real estate market this Spring are stopped dead in their tracks, like deer in the headlights. So I am going to provide you a bit of insight as to why you CAN put one foot in front of the other, go ahead and move on to your next great adventure, regardless of how the market is behaving. 

    A little real estate economics:

    Sellers: Your home equity + declining home values = increased buying power

    Most sellers have a chunk of equity in their homes today and whether you have owned that home for 7 months or 7 years, there are gains to be made in today's market. That equity combined with the slight cost decline of homes is only going to get you a great upgrade to larger square footage, more convenient location, bigger yard, mountain views, and luxury fixtures! We are also located in a market pocket that has been protected historically from large drops in homes values. While other parts of the country are experiencing declines of up to 20%, our average decline is 5.3%. What this means is that any time when prices are plateauing or taken a small decline, it's a GREAT time to sell!

    Buyers: Buyers are also SELLERS! Most of you have a home that you are dissatisfied with enough to make you take the leap to a new home that is going to work better for your family. If you have a home to sell as well, you are in a great position to use that equity as your down payment on a new home. 

    And as far as interest rates go, they really aren't so bad. There have been many times that interest rates have been in the double digits in the past and people buy. Interest rates are simply the cost of borrowing money, THEY ARE TEMPORARY...when they go back down...refinance!

    Real estate rates and prices fluctuate and in its simplest terms what goes up must come down! Einstein points out that space and time are relative, and all motion must be relative to a frame of referenceIf a spaceship 100 feet long was flying by you at 1/2 the speed of light, it would appear to be 87 feet long. Is it really 87 feet long? No.... 

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    It's all about perspective. When you think about the sale of your home in the perspective of financial gain and a home that will function better for you....the cost is already paid for with the equity you have acquired....you have your solution! 

    Let's move on to your future promise of life built by design.