Could this real estate market get much worse as the media is portraying?


Every time I pick up a business or real estate publication it speaks of doom and gloom. Homeowners at record foreclosure rates, banks walking away from homes, Bear Stearns, homeowners need bailing out, bird flu (wait, what happened to bird flu?), etc.


I think the truth is the media is usually 6-12 months late to any cycle, and then make matters worse by crushing consumer confidence.


I know for my business, that 2007 was absolutely miserable for sales compared to the first quarter of 2008. Why that is I don’t know.


Let’s look at some positive news before we assume we are heading towards the next Great Depression (which is what a friend of mine predicted). The fed is doing everything they can to bail us out. They are lowering rates, politicians are talking about bail outs, and even JP Morgan is helping out troubled overexposed Bear Stearns. So the big question is where is and how do we identify the bottom in this real estate market?


I think we can look at recent history from the real estate bubble and how the media fed this frenzy and turn it to our advantage. For years, the media kept pumping us with all of this great news about the housing market, how investors were making small fortunes flipping homes and land, and how we were all improving our lives spending the bloated home equity we acquired in our homes.


Now the opposite is happening. Housing and credit problems, Countrywide mortgage scams, rampant fraud, banks in trouble, and 10-20% pricing declines across the board. Well, I know my development friends are circling like vultures picking up land from out of cash developers for 33 to 50 cents on the dollar. Why are they buying now? Why not wait a little longer?


This is what they do professionally. If we haven’t hit bottom, why not wait a few more months? I think they are buying now because the deal makes sense for them and they instinctively know in real estate you make your money on the buy not the sell. If they can hold on for 2-5 years while the market shakes out they know they will be positioned beautifully for the real estate rebound. Then, when the media starts hyping up the great deals, we know we are in the next cycle already and way out of the cellar.


I’d be curious to know what you think of this market and when you suspect things will bounce back?