THE PRESIDENT’S CORNER #2 History Repeats Itself

THE PRESIDENT’S CORNER
Larry Underhill
Lodi Association of Realtors 2007 President

WHAT DO THE “EXPERTS” SAY about the ‘real estate bubble”…Did it burst or is real estate still a good investment?

1. “Houses cost too much for the mass market. Today’s average price is out of reach for two-thirds of all buyers.”
2. “The goal of owning a home seems to be getting beyond the reach of more and more buyers.”
3. “If you are looking to buy, be careful. Rising home values are not a sure thing anymore.”
4. “Most economists agree…a home will become little more than a roof and a tax deduction, certainly not the lucrative tax investment it was…”
5. “Financial planners agree that houses will continue to be a poor investment.”
6. “A home is where the bad investment is.”

These cheery pronouncements from “experts” were provided to me by local loan officer Cory Semer of Summit Funding. (Note: Cory is also a past President of the Lodi Association of Realtors, back when he was a successful local Realtor). Now for the rest of the story. Cory asks, “Do you think the real estate market has nowhere to go but down? You’re not the first one. History proves that even the ‘experts’ have had it wrong, time and time again. Consider the quotes noted above. Here’s the list of sources and publishing dates:

1. Science Digest 1948
2. Business Week 1969
3. Miami herald 1985
4. Money magazine 1986
5. Kiplinger’s Personal Finance Magazine 1993
6. San Francisco Examiner 1996

Cory’s point is well taken. The truth is that real estate IS cyclical in nature. The funny thing is that every time the market tops out, some folks talk as if it’s a new phenomenon. Toynbee said, “The majority is almost never right.” One thing IS for sure: When everyone is telling you you’re crazy to buy, you’re on the right track! Someday ten years from now (or sooner), people will bemoan the fact that they failed to buy real estate back in the “good old days when homes were affordable: 2007.