"So if you wait for the robins, spring will be over."--Advice from Warren Buffett
Warren Buffett said in his recent Op-Ed piece in the NY Times "So if you wait for the robins, spring will be over." Although, Mr. Buffett is speaking about his philosophy relative to stocks, I believe it also applies to real estate investing as well.
When the richest man in the world speaks, I listen and take notes. Even though this may seem to some like simple homespun wisdom, Mr. Buffett is perhaps the most respected investment adviser in America, if not the World. He started investing when he was a child and because of his passion and his focus, he is now worth over 50 billion dollars. I found his Op-Ed article "Buy American I Am." in the October 17th edition of the New York Times fascinating on many different levels.
Below are several more of the quotes and observations Warren Buffet made that I found most interesting and relevant to the world of real estate. What follows his quotes is my interpretation of how I think it relates to real estate right now.
"In waiting for the comfort of good news, they are ignoring Wayne Gretzky's advice: 'I skate to where the puck is going to be, not to where it has been.'" Warren Buffett quoted Wayne Gretsky here. I believe many people are trying to outfox the real estate market, which is really impossible. You cannot. Each week dozens of people ask me when the market is going to hit bottom, and my answer is always the same. If we are not at the bottom, we are very close.
"In short, bad news is an investor's best friend. It lets you buy a slice of America's future at a marked-down price." To me most of Miami is on sale right now at values below that of 2005. Depending on the location and property, real estate values are down between 20% and 40% from the highs of late 2005 and early 2006.
I believe investing long-term in oceanfront and waterfront property in the Miami area whether it is a primary residence, vacation home or investment property. In taking a page from Warren Buffett's playbook, I believe that you should plan on holding it for at least several years at a minimum. The key is long-term.
South Beach, Miami Beach, Bal Harbour, Surfside, North Bay Village and Sunny Isles Beach all currently offer great buying opportunities in different price ranges. We have a lot of inventory right now with over 5,800 condos and homes available for sale in waterfront buildings in these areas and only 130 to 180 selling each month. Right now we still have more than a 3 year supply, so there is a lot of competition out there and if a condo is not priced right, they will not sell for a long time. Note that I am not including Miami-Dade County as a whole. Right now in Miami-Dade there are almost 25,000 condos available for sale of which only about 500 are selling each month. That is more than a four year supply.
Mr. Buffett stated "Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month - or a year - from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up." Isn't this the kind of advice we should be giving our clients? I believe it is impossible to predict where the real estate market will go in the next few months or years. All I know is that eventually prices will go back up, especially in the most desirable areas, which are oceanfront and bay front condos and waterfront homes.
"Today people who hold cash equivalents feel comfortable. They shouldn't." To me this means that if you have the cash and liquidity to invest in real estate, now is the time to do it. As we said before, it is impossible to time it just right, but it is a pretty good bet that real estate bought now will be worth a lot more in 10 years.
"Be fearful when others are greedy, and be greedy when others are fearful." What an interesting thing to say. What great advice when you couple it with common sense. Isn't it true that most people that become wealthy do so because others are unwilling to go against the tide? Most people follow the herd. They say that more fortunes were made during the Great Depression than at any time in history. Perhaps this is a time to take advantage of some great opportunities.
Disclaimer: The information provided herein is supplied by several sources including the southeast Florida MLS and is subject to change without notice. Miami Beach and South Beach Real Estate Blog does not guarantee or is any way responsible for its accuracy, and provides said information without warranties of any kind, either express or implied. Entries on Miami Beach and South Beach Real Estate Blog represent the opinions and ideas of the author(s). Miami Beach and South Beach Real Estate Blog does not express the views of the broker.
Copyright © 2008 By Michael Sahlman, P.A., All Rights Reserved.*"So if you wait for the robins, spring will be over."--Advice from Warren Buffett*.