What the Facebook IPO Says About the Economy
Over the last few weeks we have all watched as a Facebook IPO that was supposed to finalize the economy has since failed to recover its initial price offering. This definitely has been one of the more surprising events that we have seen in the overall economic calendar.
Many people have reflected on this Facebook launch and realized that the taste of simply throwing an idea that American people and expecting them to jump on board in fact the idea without any factual financial proof of sustained growth may be behind us. Investors are now simply less likely to jump headfirst into any investment that is backed by legitimate business sense. Facebook is a company that definitely has a ton of free users, but the ad revenue is relatively weak because those searching the history of events that make up their friends’ lives are not in a position to make purchases. For this reason, the advertising value for Facebook is relatively weak.
How does this relate to housing?
Yes, we are on a real estate site here, and it makes sense that we somehow applied whatever is that we are discussing to the market. The relationship between Faceboook’s IPO and housing has much to do with the fact that housing prices are not popping near what many claim to be the bottom.
Why are housing prices not popping?
The fact is housing is not going to pop the way it did nearly a decade ago because the overall marketplace is not filled with people who are as gung ho on the idea of throwing real money around in the hopes of creating wealth. It’s just not part of feet overall economic culture at the moment. People are still licking their wounds after being burned by the previous downturn that drained both housing and stock prices.
The Good News
The good news is that we are now in an economic cycle where sound judgment and careful planning seems to be playing a significant role in the way investors are approaching major market decisions. Sound judgment and careful planning will inevitably lead to healthier markets over the long haul, and more than anything, we in the real estate market want to see the house recover its role as the great American asset.