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Real Estate Recession and Military Base Closures - The BRAC

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Gudrun and Tcat have discussed the market cycles and in quite a few of our pieces, how down trends in the real estate market are spotty, and not uniform. We found what for some is a real crystal ball! It is called The BRAC. This rather large tome may help you figure out is your market experiencing or about to experience a real estate recession? It turns out many builders look at The BRAC to figure out where to build new construction.

Certainly, are quite a number of factors to consider before even coming up with a probably yes or probably no real estate recession in your market. There are no definitive this or that methods of prediction. It's not a matter of just "reading the tea leaves" either. If you happen to be in an area containing one of the thousands of military bases, "The BRAC" can be a major clue to real estate boom or real estate recession. In this short article we'll take a look at what's that means.

The BRAC is actually an acronym from the United States government. BRAC is short for "Base Realignment and Closure". This is a fancy term coming from the Department of Defense (DoD) which tells you in a high likelihood, what side of the coin you are going to be on. Let's give an example.

We have mentioned to you on several occasions that an area that is doing well is Huntsville, Alabama. So unless you're a student of history, have business in that area or live in that area, you probably have little to no idea where Huntsville is or why is it hopping?

Huntsville is in the middle of Alabama, featuring one of the older mountain ranges in the United States. Now granted. Gudrun knows more about the geography of Germany than I do. When we were touring Huntsville. I mention to her. My understanding is that Godard had picked hear to live and work, because it reminded him of the Black Forest in Europe.

She agreed that the rocky limestone mountains and vegetation in the forest was quite similar. Sidebar, for those of you who don't know Got hard. He was literally, a rocket scientist snapped up by the USA at the end of the second world war to work on missiles and space exploration. So what does all this have to do with The BRAC? Well it turns out, just about everything.

NASA has a complex it runs in Huntsville. Makes sense. They use rockets too. Redstone Arsenal for the United States Army, is there as well. So what does this all have to do with the BRAC, You may be repeating.

As the world and technology has changed, so has military requirements. The bottom-line is, the Department of Defense is consolidating bases. If you're not familiar in the reading of management speak (sometimes called Sanskrit) --- consolidating bases means were closing up a bunch of bases. As in: kaput, gone, closed, good-bye.

As many military families live off base, along with 100% of the civilian support personnel and contractors, a base closure is highly likely to cause a real estate recession in your area. So what's up with Huntsville? Well it turns out that the remaining duties from the bases and installations that are closed still have to have something happen somewhere.

In this case it means: Huntsville wins! So of course, finding even empty land to develop on in Huntsville is a daunting challenge to say the least. Naturally of course than existing housing prices are on a solid upswing. However. Before the entire state of Alabama begins to cheer, we would like to point out the other side of the coin for Alabama.

Page 35 of the 2005 BRAC, updated in April 2007. The first listing for Army, State of Alabama. Abbott USARC in Tuskegee, Alabama. It says: "estimated completion date for all closure or realignment actions: May 1 2010".

Think that might cause a bit of a downturn in housing prices for Tuskegee? Of course, this is not the only closure happening. However, some are a little bit luckier than others. Looking at page 40 of the BRAC we see:

Faith Wing USARC Anniston, AL is about to suffer the same fate however, careful study of this BRAC entry reveals that while the closure will be complete. 1 July 2011, FEMA Federal Emergency Management Agency - Department of Homeland Security will be stepping in with a "Anticipated Transfer Date" of 1 September 2011. So a recession hitting this city is far less likely.

All in all, the BRAC weighs in at 1835 pages.

Perhaps now you can see how many factors can go into a real estate boom or bust in United States. We want to thank, J.C. Newark, California for writing in and asking why can be so difficult to figure out why some markets are sinking, while others are swimming.

Come on! It's dark, stuffy and hot inside this little box of electronics. Not only that, we cannot hear you when you talk to us. Follow J.C.'s lead and send either of us an e-mail to tell us what topics you would like to hear about.

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