Bad Ideas Can Be Contagious

Nearly four decades ago, psychologist Stanley Milgram had a volunteer stand stock still on a busy New York sidewalk and look up at the sky. About one in every 25 passersby stopped to look up, too. When five volunteers were recruited to sky-gaze, nearly one in five passersby stopped to look up.

When Milgram and his colleagues assembled a group of 18 volunteers to simultaneously look up at nothing in particular, nearly one in two passersby looked up to see what was going on, snarling traffic within moments.

This can be smart if the people on whom you are modeling your behavior know more than you do. But in many situations, no one knows very much. When you follow people who don't know what they are doing, and other people follow you, the resulting feedback allows small events to trigger huge and irrational changes in group behavior.

Such thinking was behind the "Washington's real estate market will never soften" belief between 2000 and 2005, and it's also behind the pervasive pessimism that plagues the same market today, said Robert Shiller, an economist at Yale University and the author of the book "Irrational Exuberance."

As global communication has increased with the advent of the Internet, Shiller and others said, ever-greater feedback systems and contagion effects are likely in real estate and financial markets. To read more click here.

By Shankar Vedantam, The Washington Post
Monday, December 17, 2007

U.K. Citizens Snapping Up Overseas Real Estate

New study shows steady growth for next five years; U.S. remains a top choice.

Spain, France, and the U.S. continue to be the three most popular destinations for British and Irish buyers, with Florida being their overwhelming favorite location in America.

Other popular locations for British and Irish buyers include Cyprus, Greece, Canada, and Australia. Younger, more adventurous buyers also are snapping up properties in Bulgaria, Croatia, Egypt, and India.

One reason British interest in U.S. real estate is high is because the U.K. went through its own real estate downturn and they know the opportunity to buy at bargain prices may be short-lived. Plus, the strength of the pound and the euro gives them exceptional buying power.

The survey confirms the results of a study on international buyers released earlier this year by the National Association of Realtors. That study, the 2007 NAR Profile of International Home Buying Activity reported that 20 percent of Realtors had sold at least one house to an international client within the last year. By country, buyers were most often from Mexico, the U.K., Canada, India, and China, and half the sales were concentrated in Florida, California, and Texas. To read more, click here.


By Pat Curry
Source: BUILDER Online News Service
Publication date: December 10, 2007