Backcast to Forecast.. What will happen to real estate sales going forward?
Being in lockdown has me looking for interesting information to share with anyone who cares to read my blogs. In this piece, I am reminded of a lesson I learnt when I first worked in a marketing department as a junior analyst.
My then manager gave me a task and hinted…. before forecasting…. back cast! Basically, he was telling me to look at history and what may have occurred and factor that information into your forecasting data.
So, if the question is what will happen to real estate sales going forward, I should naturally commence by looking at what has happened in the past when the market has been hit.
In the 1990’s the crisis was one of rapid over construction, Spain’s integration to the EU, devaluations, and sudden wealth that generated unsustainable accelerated growth.
In 2008 it was a global economic recession lead by the US and its banking system falling apart leading to the regional and national dominoes falling over one by one. Real Estate prices collapsed as demand disappeared, with new products suffering much more than resales. The recovery did not commence until five years after the initial bomb blew up, and probably never reached it previous peaks.
Today we are facing a new recession, caused by the coronavirus. If the issue with Brexit was “uncertainty” then COVID-19 has really redefined the definition of the word. We do not yet have any data to guide us, and there are so many uncertain questions to be answered.
- When will lockdown end?
- When will we be able to travel internationally?
- Will we have a tourist season the summer 2020?
- Will people want to travel even though they can?
- How long before a vaccine or cure is found?
- Will Spain recover without EU assistance?
- How expensive will air fares be once airlines recommence flying?
- Plus, plus, plus, plus!
So many uncertainties. We are in a vacuum right now and to predict or forecast the future is impossible. One thing would be certain. Whatever forecast anyone is making; it will be wrong!
