Where You Think You Is Isn’t Always Where You Actually Be

Ever been at a mall you didn’t know as well as you thought? You turned left, certain you’d run into the food court only to see Saks Fifth Avenue looming dead ahead? This is interesting to watch in real time while relaxing with coffee and a couple large oatmeal raisin cookies. You notice almost immediately there are generally two kinds of reactions — folks simply keep wandering around, insisting they’re not mistaken — or they pause and ‘reboot’, either lookin’ for familiar landmarks or someone/something to point the way.

Lay this analogy/template over the concept of real estate investing. We often think we know where we are, and/or where we’re going. This is where I’ll insert an axiom.

BawldGuy Axiom: Everyone’s crystal ball is as cracked as the next guy’s. If you think otherwise, stop reading, you’re beyond any help I’m qualified to offer.

Here’s the point: We’re at the place in the up ‘n down world of economic cycles where folks begin tellin’ the world exactly where we are. Most of ‘em haven’t done sufficient analysis or have enough experience to predict anything but that the sun will set in the west. Here’s an example.

I keep reading how San Diego real estate is showing signs of bouncing back. Many are pointing to bidding wars for bank owned properties, significantly reduced supply, and how current stats can even be evidence of — don’t laugh — a current, real time seller’s market. Look, anyone who’s read this blog for any time at all has figured out I prefer optimism if given a choice. But a choice implies at least two positions which can be credibly argued — credibly being loosely defined as the ability to do so while not crackin’ a smile.

What these people ain’t tellin’ you, no doubt ‘cuz they’re simply unaware, is that San Diego, (California for that matter) has been under a foreclosure ‘pause’ for four months. See, last fall FannieMae and FreddieMac in concert with some of the really big private banks decided to declare a four month moratorium on foreclosures. Oops. What affect might that have on the whole supply/demand thing-a-ma-gig? Yeah, exactly.

Wait though, there’s more.

That moritorium (federal) is over, but California, those wily wascals, just announced their own foreclosure moratorium for 90 days. My math says San Diego will have had seven months of no foreclosures. Gee, no artificial skewing of supply/demand there. Think maybe the San Diego real estate market might have their numbers blown up one way during seven months of foreclosure moratorium, then the other way when it’s over?

Pay no attention to Captain Obvious wettin’ his pants laughin’.

Now do you think there’s an ongoing recovery in San Diego’s real estate market? What’s about to happen is a flood of foreclosures which will, relatively quickly, skyrocket the supply of bank owned properties for sale. I’m thinkin’ the last quarter of this year could see their arrival.

Credit where credit is due: The real work on this was done by none other than Brian Brady, the lender of choice when BawldGuy actually has a choice locally.

This is just one simple example showing how we can think we know where we are, OR actually understand where we are in point of fact — empirically provable fact.

The same goes for your Purposeful Plan. The map changes, and though we don’t have total control over those changes, we can control how our response to them. Being completely objective and willing to alter course is one indicator of a serious real estate investor. Give me a call, and let’s find out exactly where you are these days. You’ll reach me at 619 889-7100. Have a good one.

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