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Archived Articles
Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.
He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.
In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.
Global Real Estate Project
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Real Estate Interconnections - part 2To understand the general trends and the fluctuations on the real estate market we must look outside the market itself. Matters linked to personal security, international security and macroeconomic climate are essential for such understanding. But they aren't enough in order to have the whole picture. Other factors too may influence the market, some of which are more or less likely to be manipulated by our activity.
Economic heritageIdeally within a national market the prices should go up quicker where they are lower and vice versa. That was the way the national markets were developing during last centuries. More and more goods and services tend to be valued around the national average. The higher transport costs are the only factor that should impede complete amalgamation of the prices. The real estate market doesn't work exactly like this model predicts. Areas with low prices tend to remain undervalued. Areas with higher prices tend to experience prolonged market booms. The prices don't tend to reach some national average.People go shopping not only as a way to find residence but also looking for some lucrative investment. Many of them tend to invest not in cheap properties, but in quickly improving capital returns. This may sound as truism, but the real reason for the opportunity to have such multi-speed market is that the economic heritage makes some areas more suitable for booms and other for stagnation. It depends on the added value of the industries and services developed in the area, not on the general macroeconomic indicators such as GDP. Once the high added-value period is over, the real estate market developed less aggressive stance. To have more robust real estate market it's preferable to have 10,000 hi-tech jobs that create substantial added value and expand the business than 100,000 textile workers, which jobs are under threat.
Natural obstaclesTo illustrate this factors let's look at the North America map. Similar but not identical patterns can be found in other continents. Historically North America in the last 400 years has been developing following natural obstacles that have helped creating the largest urban areas where the real estate market today are most developed. The first obstacle was the Atlantic Ocean and here we have many large enough cities like NYC, Boston or Quebec city that were used as transport hubs between Europe and the continent lying west. The second obstacle was the fault line that made impossible for large boats to go up the streams and the cities that were created to facilitate the transportation were Alexandria, Philadelphia and Montreal. The third line was Mississippi river and the Great Lakes, the fourth - the Rocky Mountains, the fifth - the Pacific Ocean.The urban map of North America looks like a grid linking the areas from these 5 lines with one another. The economic map of the country follows this grid, so does the big money. The fault line NYC-Philadelphia-Baltimore-Washington with population of more than 30 million is in fact the naturally crated phenomenon that has been exploited and developed into one of the largest continuous urban area in the world covering over 750 km from north to south. The flow of people, goods and services along this corridor is huge, so the real estate prices tend to go up.
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