January's flavor of the month in the commercial world was ... Bulk builder buyouts
February's flavor of the month was REOs
What is March going to be? Good question. I think March and even April will be leaning heavily towards Hotels & Leisure plus most things medical.
Why do I say thet? Well history predisposes me to suggest that people tend to follow a bandwagon because they see profits. The higher percentage returns I see at the moment are in those areas. I personally would opt for medical in the long term due to the growing numbers of us living here. We all get sick sometime! Also I see consumer spending is dropping and that will undoubtedly mean less vacations and spree spending.
BUT, what about the bandwagon that loses it wheels i may hear some of you ask! VERY good question!
Look at the mess the residential market has got into. It was of course, an accident waiting to happen. The builders must have been rubbing their hands with glee for quite some time, but they never saw what was in store, all they could see were $ signs. The price of homes rose so quickly that it had to come to a shuddering halt!
When a market escalates as quickly as the U.S. market did, it cannot continue forever. It's a bit like pyramid sales but then again it's not. The wily investor would have got in early when the market was low and then got out before the slide started. They are the winners here! They will get back in when they sense the market is ready for recovery. Until then they will have placed their investments into solid capital producing ventures and almost certainly know how much they will be earning for the foreseeable future.
The UK had this problem back in 1987. The pound was devalued and it took a long time to recover. The house prices tumbled! Whoever says the market will recover in the short term is talking rot! This is a long term recovery. I predict at least 7 years until we get back to where we were, (it could be a little longer).
People holding onto property in the forelorn hope they will sell it near the top price will only see their value eroding further. they need to get out before it gets worse in my opinion!
I for one will be holding off buying another house for some considerable time unless someone wants to accept MY valuation of their property, that would be about 10% less or more than what it is worth in todays market. The only reason I would consider buying a home now is for this reason. I do not see myself selling it! Not for 10 years at least.
I have always been one to take a long term view. Profiteering works for some but many people get burnt. The reason? They get greedy!
People out their remember this! You need to educate your clients.
Doyno Realty Inc.
9040 Town Center Parkway
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