Everything you need to know about buying and selling real estate in Mexico, Puerto Vallarta, and the Banderas Bay region

Monopolies, Underground Markets, and Ethics

The Color of Financial and Real Estate Markets

A BLACK MARKET or underground economy, or shadow economy is a market-characterized by some form of non-compliant behavior against an institutional set of rules. If the rule defines that a set of goods and services production and distribution is prohibited by law, non-compliance with the rule constitutes a black-market trade, as the transaction itself is illegal. Parties engaging in the production or distribution of prohibited goods and services are members of the illegal economy. Examples include the drug trade, prostitution, illegal currency transactions and human trafficking. Violations of the tax code involving income tax evasion is really participation in the unreported economy. 

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Property is An Emotive Asset

The Irrational Side of Real Estate

Real estate is a highly emotive asset in most cultures.  ‘Irrational exuberance’ in property markets can cause prices to move away from fundamentals. Buyers move away from markets when negative press reports are released. The truth or vetting of what happened, is not necessary. Unfortunately, emotional reactions trump logic. Real estate markets suffer from a greater degree of misinformation than stock markets. In real estate, no two assets are the same.

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When Pricing Moves Away From Fundamentals

Behavioral Biases in Real Estate Markets

One of the most interesting asset classes where we see the very pronounced influence of behavioral biases is in real estate. Why is real estate such a ripe area for behavioral biases? Real estate is a highly emotive asset in most cultures. This can help explain phases of ‘irrational exuberance’ in property markets where prices move away from fundamentals.

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