Posted on February 27, 2008 @ 12:11 am - Written by BawldGuy
Those who’re more or less regular readers here might remember my prediction, made in the first week of the year. In a nutshell I said we’d look back a 2008 knowing it was the year the correction bottomed and began it’s long and ponderous U-Turn.
Sam Zell is a multi-billionaire — and real estate is definitely his forte. Well guess what? He thinks this spring will mark the beginning of the housing recovery.
Does this mean since Sam says so it’s happening? Uh, hellllloooo. Remember that pesky guy, Reality? Sam Zell has tremendous credibility, at least from where I sit. If I was gonna look for one guy to give me the heads up on real estate it’d be Zell by a mile. I’ve watched him for quite awhile — he’s simply the cream of the cream.
I write all this for a pretty reason. I was on the phone today enough to require two recharges. Over half of them at some point wanted to know why I keep saying the window is closing. These pages have enumerated those reasons ad infinitum. Instead of asking why I say it, ask yourself another question.
Does Sam Zell go live on CNBC saying, “I think the housing market this spring will begin its recovery phase.” if he doesn’t believe it, and hasn’t been convinced for his own reasons? Of course not. Could he be totally wrong, out to lunch? Yep. Wanna bet against his track record in real estate? His money — his billions have largely been made calling these market transitions and being ahead of the curve.
Heck, I’m tickled to death I’m on record here saying the same thing over two months ago.
Why does this all matter to you? It matters because THE WINDOW? SHE IS CLOSING.
If you’re in San Diego and need to sell yer stuff to take advantage of the growth regions — then sell yer stuff. Email me — Call me — Send a message via carrier pigeon — but you need to take your San Diego equity (Palo Alto this means you too!) and start the process that’ll get you Outa Dodge. You should begin this process around 4:30 yesterday afternoon if not sooner.
You can go to the Brown and Brown company site, or contact me from here. Remember, if you’re a San Diego income property owner our new local business model will save you a whole bunch of dead presidents. It’s already proving to be pretty attractive to local investors — that is if a two phone charge day is an indicator.
I realize I’ve been beating the timing drum lately. The evidence is beginning to indicate a potential for a recovery is plausible. We won’t have an opportunity like this for quite awhile in my opinion. The last time was over a decade ago.
Yet again, I’ll repeat the mantra — Time isn’t your friend when it comes to this window. Sell your high priced San Diego (heck, anywhere in California) property and Get Outa Dodge!
I’ve heard this song far more while on a baseball diamond than a dance floor. When umpiring it was played whenever I raised an arm towards the bullpen and tapped it, signaling what pitcher was to relieve the one getting bombed. Let’s all have a positive thought, and enjoy a trip in the Way-Back Machine. I nominate it as the theme song we should play as the current Market Correction leaves us — whenever that may be.
Posted on February 18, 2008 @ 12:56 am - Written by BawldGuy
What’s a paradigm in real estate? Here’s one used so often you can’t open a blog reader without reading about it. Real estate is local. I don’t see that one changing soon.
Since World War II there’s been another paradigm. This one isn’t talked about much. Going back to when the G.I.’s came home, went to college on the G.I. Bill, then bought homes via V.A. loans, this paradigm has existed.
To be clear, I’m only gonna be talking about Southern California as a general example. To be fair, even those regions with a history of slow and steady combined with a pronounced and demonstrable absence of periodic spikes in appreciation rates, show measurable increases in appreciation every 10 years at least once. Instead of a spike it’s more accurately called a small blip. An example would be a region accustomed to 3-5% yearly, enjoying 6-8% for a year or two.
The following is a rough history of Southern California real estate prices.
Every decade there is at least a year or two when real estate prices rise at a relatively higher rate than the historical average. But let’s forget averages. Here’s what’s happened to real estate values (home values) since 1940, which obviously includes a decade in which WW II accounted for more than half. So what happened?
Every 10 years, (let’s use from ‘0′ to ‘0′ each decade) prices doubled more or less. Even in the 1940’s when the first half of the decade the world was at war.
The 1950’s included all kinds of huge and positive changes in the American way of life. Appliances mass produced. Lower and middle class citizens getting college educations. The embryonic stages of our space program. The first two major league baseball teams moved to the west coast. Prices doubled from ‘50 to ‘60.
The 1960’s saw the Viet Nam war, three very traumatic political assassinations, and the huge cultural changes caused by the advent of the pill. Huge political upheaval defined the ’60’s. To top it all off, the Amazin’ Mets won a World Series in ‘69 — a year of recession. Yet prices doubled from ‘60 to ‘70 give or take.
The 1970’s saw our withdrawal from Viet Nam, the shameful resignation of a president, monster inflation, our nation’s 200th birthday, the birth of the Padres, and the crash & burn of the economy in the decade’s last quarter. Yet prices roughly doubled from ‘70 to ‘80.
The 1980’s saw a ginormous income tax cut, massive job creation, and the biggest one day drop in the stock market since that dark October day in 1929. Geez, even the KC Royals won a world championship, and the lowly Padres, led by a svelte Tony Gwynn got into a World Series. The first third of the decade was marked by double digit interest rates and very hard times. Yet prices pretty much doubled from ‘80 to ‘90.
The 1990’s opened with the now infamous S & L Crisis which wreaked havoc indiscriminately. In San Diego it was made unimaginably worse by the loss of a few of our largest most deeply rooted employers. The Chargers went to the Super Bowl and rolled over for the 49ers. The Padres did the same for the Yankees. It could be argued the entire first half of that decade was disastrous for real estate. Still, from ‘90 to ‘00 prices again more or less doubled.
The initial decade of the 21st century? The first half saw prices rise 2½-3 times. Then came the inevitable correction, and what a correction it’s been. Wanna bet the prices in 2010 will be about double what they were in 2000? Wanna bet against it? I didn’t think so. Here’s what would happen if they didn’t.
I’m thinking of three income properties I sold for $200,000 in the first quarter of ‘01. They sold for just under $525,000 in the late spring of ‘05. If their value dropped a net 25% +/- in the 4½ years from their June ‘05 sales price they’ll be worth $400,000 — which is, (in totally awesome Valley Speak) OMG, double their ‘00 value. Go figure. My cracked crystal ball is as reliable as yours, but it seems that’s a scenario as plausible as any.
I’ve spoken before here about presidential election year economies. Since the end of WW II they’ve all been good to very good with just two exceptions — ‘80 & ‘92. We’re in an election year, and it’s my view the four months or so preceding election day the national economy will be measurably on the upswing. We’ll know one way or the other this summer. It pretty much comes down to how quickly the pitiful excuse for a stimulus package combined with the Fed Rate cuts (another ½% next month?) begin to impact our economy.
Also, and this has not a thing to do with anything but my memory and experience, since I was first licensed back in October of ‘69 (just days after the Amazin’ Mets won the World Series) there has been a trend repeating itself inside the paradigm.
Generally, prices are kinda sucky in the front end of the decade. The middle seems to find a balance, sometimes even falling a bit. From around the 6th or 7th year ’till the end prices have risen. That cycle was ended when from ‘97 through give or take summer of ‘05 it was all up up up.
Again, I’ve spoken of this many times before here. I’m thinking since the cycle was destroyed by ignoring the slowdown period usually found in the middle years, I think the recovery will follow the same altered path.
Though the above example used So Cal, it can be argued regions around the country experienced the same trend lines even if to differing degrees.
That paradigm is what I think is about to shift, if only for the 20 years beginning in 2000 and finishing around 2020. As mentioned above, the first half of this paradigm shift has already occurred with 8 straight years of rising prices, many years sporting silly increases.
For the 10 years beginning with the recovery — whenever it begins — we will see most of the country with some very rare exceptions, plod along at 2-6% annual appreciation. Slow but steady. If we allow ourselves the hopelessly impossible exercise of predicting 2020 So Cal prices, it’s my guess they will fall short of doubling 2010’s prices. Our thinking will have to undergo a change. Think plow horses instead of race horses when you ponder appreciation.
BawldGuy Disclosure #37: As usual this opinion along with my heavily armed Starbucks card will get us some coffee and cookies.
Those who insist traditionally high appreciation regions will fall right back into the old pattern might be, in my opinion giving voice to their hopes. Until proven otherwise, I’m behaving as if 5% appreciation is flirting with Nirvana.
Posted on February 3, 2008 @ 9:03 pm - Written by BawldGuy
Said here earlier today:
If the Giants play the best game possible, get a few calls and a few Patriot mistakes, they’ll beat the point spread. I want them to win desperately, but reality tells me if they played the game 10 times, the Pats win at least 9.
Apparently they played the 1 outa 10 today. Being dead wrong has never been so satisfying!
Eli Manning is a Super Bowl MVP!
I couldn’t be happier for both the Giants and Eli Manning. The kid has done nothing but eat everyone’s BS since he came into the league. He been a class act the whole time, and now all the BS shovelers are being served a seven course meal off their own evil menu. Life is good.
This also bodes very well for the Chargers, as they can now see clearly what was in their grasp had they been anywhere near healthy a couple weeks ago. Again there’s no crying over spilt milk, but this Giants victory should put a bee the size of a B-52 inside the Chargers’ bonnet.
For those in Texas who wish to gloat over today’s prediction, (90% of which was correct, by the way.) I have just one thought.
At least the Chargers and Packers actually got into their conference’s championship games. The Chargers did it by beating the DEFENDING champs ON THE ROAD. Maybe next year one of the Texas teams can figure out how to win a playoff game at HOME for Heaven’s sake, against a team they’d already beaten twice this year.
But I digress.
Congrats to a class guy and a class team — Eli Manning and the NY Giants.
How ’bout this for next year’s Super Bowl match up?
Cowboys vs Chargers And remember — you heard it here first.
Posted on February 3, 2008 @ 2:07 pm - Written by BawldGuy
Here we are just over an hour from kickoff, and I’ve already had more than a dozen hot wings. Hmm good! Before leaving for her store late this morning, The Boss made sure both the oven and fridge were over stocked with coma producing goodies. I heard 2 Super Bowl food facts on the never ending pre-game show. 5% of the avocado crop is bought with today in mind. Pizza sales double today. Wow.
My diet of choice will consist of more wings, a bag or two of corn tortilla chips, and various dips. Spinach dip will most certainly dominate, though guacamole will surely make its presence known.
By the second half, which by tradition means it’ll probably already be a wipeout for the favorite, I’ll be switching to celery as my dipping shovel of choice. This will allow me to fool myself into believing my intake for the day was intelligently moderated. It’s amazing what we can sell to ourselves, isn’t it?
What if the Super Bowl had been scheduled in San Diego this year? Oops — the entire county of San Diego is in total storm mode. Of course for us storm means it’s raining longer than a few minutes. Seriously though, if the game was here today it would be the Mud Bowl without a doubt. Visibility is around a mile at best, and it hasn’t stopped raining since I woke up. The weather guy says it won’t stop until tomorrow morning. Add to the rain 20-30 mph winds, with gusts up to 40 mph at times, and you’d of had a disaster Super Bowl scenario. So much for San Diego’s predictable clear skies, mild ocean breeze, and moderate temperature.
While I’m at it, there has been a certain real estate blogger bragging about their city. ‘Our city’s better than yours’ blah blah blah. We in San Diego easily shrug these wannabes off, as so many of those from all these so called ‘better’ or ‘best’ cities end up moving here. Yet they take every opportunity to spout off about how great their abandoned city was. Know what the biggest downside is for San Diego living? Where do you go for vacation? For those still confused why don’t you just satisfy yourself and Google ‘America’s Finest City’?
I rest my case in advance.
What if the Giants play the way they did in Foxborough the last game of the regular season? What if they sack Tom Brady 4-5 times? What if Eli has another ‘I’ve arrived’ game? What if the Giant’s running game keeps the Patriot offense on the sidelines?
In San Diego we don’t care for the way the Manning family handled the draft back in ‘04. They showed no respect for us whatsoever. Frankly, I love Eli Manning and think he’ll be among the elite QBs of his generation. He still isn’t as good as our Phil Rivers. He’s not as physically gifted, a fact no football fan would argue. The main edge Rivers has though is his leadership. Though the Chargers are far better known as LT’s team, the players look to Rivers, as he’s shown he has the ‘IT’ great QBs need to achieve great things.
The Giants couldn’t beat the top three teams in the AFC — Chargers, Colts, or Patriots. Heck, the Chargers probably would’ve beat New England in the AFC championship game had it not been for the 3 Pro Bowl players with severe injuries — all on offense. But let’s not cry over spilt milk.
If the Giants play the best game possible, get a few calls and a few Patriot mistakes, they’ll beat the point spread. I want them to win desperately, but reality tells me if they played the game 10 times, the Pats win at least 9.
Patriots 39 Giants 24And it won’t look that close in real time.
Posted on January 13, 2008 @ 3:18 pm - Written by BawldGuy
I was dead wrong when predicting last week the Chargers would win by a field goal, 27-24 in overtime. Turns out they didn’t need any extra time. Nor did they need a healthy Antonio Gates. Or L.T. Or Phillip Rivers.
Also, I got the score wrong, as the final was 28-24.
My bad.
Next, we’ll find out how well Tom Brady throws while either running for his life, or on his back. If the Pats can’t mount a running game any better than the Colts did today, Glendale will be awash in Gold, Blue, and Lightning Bolts February 3rd.
Whatever you do, take San Diego and the points. The sport world is so in love with New England this year, they’ll no doubt be favored by at least 10 points.
Wanna bet against his track record in real estate? His money — his billions have largely been made calling these market transitions and being ahead of the curve. 
(90% of which was correct, by the way.) I have just one thought. 
Of course for us storm means it’s raining longer than a few minutes. Seriously though, if the game was here today it would be the Mud Bowl without a doubt. Visibility is around a mile at best, and it hasn’t stopped raining since I woke up. The weather guy says it won’t stop until tomorrow morning. Add to the rain 20-30 mph winds, with gusts up to 40 mph at times, and you’d of had a disaster Super Bowl scenario. So much for San Diego’s predictable clear skies, mild ocean breeze, and moderate temperature. 
