Though I’ve been toying with the idea of writing about all the latest in current events, what would be the point? When the talking heads can’t agree what time it is, much less why the market’s up 500 points, then down 400, then sideways, then, well, you get it. The real takeaway here is that this is what happens when uncertainty rules the day. Which, of course begs the question.
When there’s a change in leadership, especially the White House, investors have a deeply rooted need to understand what change might be headed their way. Once that information is uncovered or released, it becomes ironically clear the substance revealed had a hand of course, but it was really the ‘not knowing’ that drove the somewhat erratic Wall Street behavior.
Investors don’t like swimming blind. Real estate? It’s the same, but different. It’s not timed by a stopwatch, nor does it turn into a soap opera if the president gets the flu. It just is. Sure, it endures bad times and surfs through the good times. But in the end, it always has value. It offers shelter, or the opportunity to achieve a better retirement — maybe sooner rather than later. It’s a place in which to operate a business, or manufacture thingies.
Since investment property is built, (mostly) on land, and the Good Lord ain’t makin’ any more of of it (I know this fer sure, ‘cuz Will Rogers said so.), the whole supply & demand thing tends to hold sway — at least in the long run. One of the most critical factors making real estate different than so many other investments, especially stocks, is that it’s simply not universal in nature. That is to say, what makes real estate in Dayton, Ohio act one way, might be the exact same reason it behaves 180? differently in Austin, Texas.
The national economy may produce numbers in the national job market that spooks some. Meanwhile, the same stats are what makes 11 different real estate markets attract investors like the pretty new girl at the local high school draws boys. Although it’s surely become a national sport, more so than I’ve ever experienced, it’s played only at the local, or at most, the regional level.
The point?
This is possibly the best opportunity to grab well located real estate investment property I’ve seen in my 39+ years in the business. When real estate investors can literally buy properties selling at prices mirroring values of 15-30 years ago, you quickly realize you’re living in some pretty special times. I’ve never seen opportunities simultaneously available during times of such historically low interest rates. Special times? Doesn’t seem that way, does it? But look back and learn. And yes, I know, the past doesn’t predict the future. I subscribe to that one myself. But it’s not a law of the universe, like gravity. It’s a paradox that though we want to complete objective analysis of the present, the past much to teach us. Still, the wisdom remains — never blindly go forward based upon past performance.
Demand empirical evidence of what’s ‘true’ now. Then realize what’s true now can be either capitalized upon — or ignored. We all choose.
When we say ‘Land, nobody’s makin’ any more of it’, we all know it’s a true, and more importantly, a reliable statement. We count on the fact there won’t be a day in our lives when we wake up to headlines screaming, “30 Billion New Acres of Prime Land Discovered”. Not gonna happen. How does that help you in the here and now? That’s that million dollar question for sure.
The million dollar answer?
When the supply of anything of value remains more or less fundamentally, and in the case of land, empirically stable for all of history, we can probably count on the fact it’ll be that way for the foreseeable future. The incredibly obvious you say? Absolutely. That doesn’t account for the rise and fall of what’s built on the finite land supply? Of course, that’s true too.
What’s also true is the never ending need for quality shelter at affordable prices. This is why the empirical data keeps showing pockets around the country where real estate is holding its own — waiting for folks to resume doing what they’ve been doing for thousands of years. Using real estate in one way or another to better their lives. The ones who’ve benefitted the most from times like the present are the ones who understand two facts of life.
1. Nothing takes the place of objective, honest, and experienced analysis. Not ‘gut feel’, not ‘this is what happened last time’, and not any of the other bromides our parents and/or their parents have told us. Nothing replaces knowing the facts.
2. The demand to own or at least control real estate hasn’t diminished any time in history. It’s been a proven winner, when not expected to perform miracles. Demand grows and subsides locally, but never universally. One region’s loss is often another’s gain. It’s been the truth of real estate since there was real estate.
So as we slowly wend our way to January 20th, keep in mind the one thing that will be happening besides the swearing in of our newly elected president. The stability of knowing what this new book’s story brings us, will calm Wall Street the same way Mother’s voice calmed us as children.
The lesson to be learned is that stability has as much to do with knowing where we’re going, than how we’re gonna get there. So don’t allow the uncertainty that’s sure to be with us into that special January day, affect your thought process. No matter how much you think things are gonna change, or how much you like or dislike what you think is coming — it won’t matter nearly as much as you expect. Take it from somebody who’s seen these transitions too many times.
Focus on your retirement Plan. On January 21st the need for shelter, places to do business and manufacture widgets ain’t gonna change. Sure, the economy will fluctuate, but that’s new? Hardly. Here’s a factoid for ya: There were more millionaires made in the 1930′s per capita than at any other time in our history up to that point. Betcha didn’t know that.
Those who solidly stick to the basics, the fundamentals that never change, are the ones who will emerge from this market correction with huge smiles.
Don’t be part of the woulda coulda shoulda crowd. I attended those meetings as a young man, and they’re nothing but never ending pity parties.
Let’s talk. Ask me why lenders are now taking our clients’ apps for new investment property loans without enforcing the Fannie/Freddie limitations on the number of properties owned. First though, ya gotta Contact BawldGuy. I’m ready, willlin’, and able to get a Purposeful Plan (see podcasts) goin’ just for you. Have a good one.
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Good Lord ain’t makin’ any more of of it.
Oh goodie. A continuation of the cliché topic. Pardon but I will object to this one in the strongest possible language short of being insulting.
To me this is one of those assumptions that have the potential for great harm. Just look a San Diego inland. There are houses cheek by jowl in places that even 15 years ago were classified unbuildable. Sometimes this is a good thing as when infill preserves open space but there are likewise downsides to urban density. Take the mixed blessing of a zoning change. If as an investor you get your R-1 changed to MF-8 you win the lottery. If the house next door gets it and you don’t then you lose.
We are making more land by building in previously unbuildable location and we are effectively making more land by intensifying the land uses we already have. Like I said, danger and opportunity. It’s a good time to be alive.
Robert — Point taken, but it doesn’t change the main point. That land was their when the Vikings showed up.
The main point is, zoning, rezoning, it’s still on the same land that was their 1,000 years ago.
Zoning is a different topic altogether.
Jeff, really you need to write a book. Excuse me while I wipe away this tear of joy.. if everyone someone was going to “bring hope” it is you.
I vote BalwdGuy for president! Really though, that was an OUTSTANDING article!
Josh — I wouldn’t last a week. There’d be someone at every grassy knoll.
Like the MiB (Men in Black)… Flash.. you now don’t remember what you just said. Back to writing the book…
Nicely written. The argument is only more intensified when you look at demographic changes and economic changes that encourage some areas to gain population, while others lose. Here in Pinellas County, they really aren’t making any more land (since they changed the environmental rules on fill!), and it is built out. Therefore, we are sitting better than Pasco County (one county north) that has much undeveloped land and little economic activity outside of real estate. They have already planned tens of thousands of homes to be built, yet many recently built homes sit empty or are in foreclosure. This is just another example why research is critical!
Real estate is a great middle class investment, the best IMHO!
PS Successful stock investing also requires ample research and can be as rewarding an investment environment, just at higher risk!
Late to the game here (typical)…
Not making any more land?? Darn right, in fact California is due to fall off the shelf at some point in the future and the global warming religion has been on record as saying the seas will rise… and I take that to mean that more land will be underwater.
See you down in Arizona Bay!!
Thanks Todd — I need that.