Tuesday June 23, 2009
Opportunity is invading today’s real estate market! It seems no matter where we turn we there are massive deals generated by corporate relocation companies dumping property, builders teetering on financial destruction, banks with too much foreclosed property and homeowners under water on their personal loans.
There seems to be no end to the constant dumping of real estate and yet there aren’t enough wise investors to come out and scoop the deals up. This makes the opportunity currently in the market seem more like a temptation to be avoided with steadfast religious fervor than an opportunity to be embraced… the dynamic in the current market is surely interesting.
The challenges to taking advantage to today’s opportunity has more to do with denial than reality. Most of those willing to dive in are unwilling to see how sacrificing a little on the sale of their own home could mean a tremendous increase on the other side of the equation. What is perceived to be the price one could have sold a home for in 2006 is now seen as a “true” loss instead of an unrealized gain. There are two analogies I can use to describe this pervasive mind set.
- Beanie Babies: The mad craze of the late 90’s was to by the Beanie Baby. People lined up at stores across the nation for the latest release of the stuffed animal. Magazines were published showing how much one could make on the sale of the “rare” colorful animals. Fortune was to be made! Check Ebay out. I’m sure you can buy entire lots of the stuffed critters for a fraction of what they were originally purchased for. The kids enjoyed the toys, but no one really saw the monetary appreciation because they didn’t sell at the peak of the craze….garage sales are littered with the unrealized gains.
- Google Stock: Right before the original offering, the pundits were speculating the offer would be a mixed bag. I only wish I had bought Google stock at the initial offering! Now, I have an unrealized loss as well by not purchasing Google stock when I could have.
Was the speculation of my loss for not having purchased or sold a reality or a personal mental fairly tale? Reality tells me it is a mere mental fairy tale…and I need to snap out of it, find some other area of investment and face today. Because I chose not to purchase, I do not have the gain or the loss (if there had been one). Most of today’s new home “wishers” are doing the same thing. They mope around seeing how much money the could have made, but at the time chose not to. Their main problem is they are so deeply into their mental fairy tale they overlook the reality around them. Wishing is not going to help them increase their chances of improving their lifestyle nor their chances of selling the home. It may be selling the home for a little less than what could have been achieved in 2006, but today’s decision to sell at today’s market price also has the savings on the other side, which is far greater. Whatever happened to purchasing a home for the mere purpose of improving lifestyle?
Opportunity knocks…..temptation leans on the door bell. Are you looking at this current real estate market as a Nun or as a wise investor?
Tomorrow…another misgiving with the opportunity at hand!