Leo Tolstoy, Anna Karenina, Chapter 1, first line
Russian mystic & novelist (1828 - 1910)

To paraphrase, all happy real estate markets are alike; each unhappy real estate market is unhappy in its own way. That may be a stretch, but I've been to the two biggest conventions for REALTORS® that there are in the US during the past two months-NAR in Orlando, FLA, and Triple Play in Atlantic City New Jersey. I was privileged to be a speaker at both conventions; I taught ABR as a pre-convention event at NAR and two of my own courses at Triple Play. At both conventions, attendance was down…way down. And the 'talk in the halls' was worried. On a shuttle bus in Atlantic City, I heard one 'seasoned' REALTOR® say to another: "I've been through bad markets before. I lived through the late '70's, early 80's, when interest rates were so high. This is different." This is different, indeed. To begin with, never have so many duped so many out of so much money. From Madoff (the media's latest bad actor) back to the many perpetrators of the sub-prime debacle, lots of otherwise rational, fairly intelligent people have been cheated.

And now, in an unprecedented way, the government is throwing money at the problem. Big money-and they are throwing it everywhere. Today's Wall Street Journal (12/22/2008) reports that commercial real estate developers are now asking to be part of the bailout. It's like a wonderland out there, and not the 'winter wonderland' they are warbling about on the radio. Call me a simple person, but here's what I don't get: Doesn't anyone see that all this bailout is just going on our tab? We the taxpayers are paying to bail out, let me see: insurance, bankers, automobile manufacturers, and now, maybe a part of the real estate industry. And in the first round, there was no accountability. Zero, zilch, nada. I really don't get that. Whenever I've wanted to borrow money, I had to answer pointed questions, like: "What are you going to do with it?" "How do you plan on repaying it?" "Can you afford this loan?" Instead, we are just, I don't know, heating up the presses over at Treasury and making money to fling around. Well, what's the point of throwing money if we aren't fixing the underlying problems? Yes, I know, Congress is 'reforming' the mortgage industry. And the banking industry. And Wall Street. But real reform, in my opinion, won't happen unless or until there is a return to accountability. If every lender made every loan as if they would never be able to sell it; if every appraiser did every appraisal as if they'd have to buy the property back for the number they appraised it for; if every fund manager made investments as if he'd have to cover any shortfalls out of his own pocket, we'd have accountability. And if Congress would have to get the voters' approval to go into deficit spending-each and every time-- we'd have accountability. Folks, we don't have accountability-we have nothing close to it. One of the things I think we will have shortly is inflation. You can't throw this much money around an economy without getting inflation. What does inflation do to real estate? Do you remember the seventies? It goes nuts!

And this market is different. It's different because people are scared. They are afraid they'll lose their jobs, their houses, their cars, their pensions. They are scared because they have seen this happen to other people-or it has already happened to them. And when the read the Internet news, or watch cable, or pick up a newspaper, there is more doom and gloom there than they can handle. People are scared who shouldn't be scared. Here's an example: I had an interaction with my computer tech guy last week. He fixes computers. He's really busy. People are fixing instead of upgrading (Moi, for example!). His significant other is a nurse anesthetist. She's got job security, because if you need surgery, I'm pretty sure you (and the surgeon) are going to make certain you are out for it, not wide awake and fretting. People don't stop getting sick because of the economy. For people like him, this market is awesome. There's great inventory (in most places) and low interest rates, not to mention, in some market, outstanding buys. Here's what else I did this fall, before the two conventions: I did state conventions, and other courses. And everywhere I went, from New Hampshire to Colorado, I asked the agents the same question: "Do you have outstanding buys in your market?" And everywhere I asked the question, I got the same, resounding, answer: "Yes!" I truly believe that in five years, our clients will be saying to us: "Why didn't you make me buy more real estate?" Now, for naysayers, here's what you are thinking: "Well, the market hasn't bottomed out yet in my area." Or "The national media says real estate won't recover until 2010" or "It's still too early". To which I say: "He who hesitates is lost" and I add the famous Warren Buffet quote: "The time to be fearful is when others are greedy; the time to be greedy is when others are fearful." Don't miss out on this opportunity-it won't last forever.

Here's my final consideration, and it is directed at you and me-the real estate professionals in the room. Sub prime money has gotten tight, and non-existent in some places. Do you remember selling houses to people during 2000-2005, and you were amazed that they were able to get a loan? Guess what? They lost that house, and they are tenants again. Tenants are those wonderful people who buy a property for the investor. Remember, real estate is the only investment someone else will buy for you. If you are in our industry, and you possibly can do so, I urge you to buy real estate yourself. Do your homework, check it out, but invest. My view is that real estate will lead us out of this recession, and in a big way. We are looking at a long view, but we will, I think, have inflation coupled with fundamental appreciation that will begin as the markets level out. We will also then have pent-up demand, which is a wonderful thing. I truly believe the people who invest in real estate in the next two years will be very glad they did in the next ten years.