The great flood.

Every year at this time we experience floods. Sometimes it’s our basement. Sometimes it’s a neighbors house. Today it was one of our apartment buildings.

The ground seems soaked to capacity with the melted snow so it does not welcome the inevitable addition of irrigation water from the system that gets opened up. Every year we have kids who are just been being kids and turn on hose bibs and leave them open. Over the winter we have freeze/thaw line breakage and then, as was the case today, there is often physical damage done by people running over or into stand pipes and exterior water lines.

Of course,the irrigation water fills the lines and then flows freely from the breaks and open spigots and finds it’s way to all the places that we wish it wouldn’t go. Then my office gets a series of frantic phone calls. I am always surprised at how people respond to these events. Rather that divert the water, open a drain or bail out an access area, they kind of freak out. They pace, chatter, worry and generally do nothing productive. They just let things get worse. They are looking for someone else to solve their problem. So of course we do. But inevitably the damage is worse than it should have been and expenses of restoration greater than they needed to be.

I think that by and large this is human nature. Overall people are just not taught to be problem solvers. Instead they learn to worry, rant and rave. They learn to look elsewhere for solutions. I believe that the underlying reason for this is a fundamental inability to actually think. I don’t mean this to sound harsh in any way, but “thought” is not a subject taught in schools. We learn to speak, to read, to memorize, to calculate, and to regurgitate facts. Much of our lives then is spent in reacting, responding and remembering but not all that much in “thought.” It’s really a simple process. At the very foundation, thought is the activity of asking yourself and answering a string of “what if” questions, then identifying the best answer possible and acting upon it.

Maybe thinking is painful. I know that just thinking about the events of the morning has given me a headache. So for the next little while, I’ll stop thinking and take the easy road and just react. For example, right now I am going to react to my stomach. It is thinking. It thinks it’s hungry.

Ciao; or should I say chow.

The positive spin on real estate should make you dizzy.

Here’s a little reality check on the positive spin we are seeing today on real estate.

I read and listen to a wide variety of news sources and I have to just shake my head in disgust when someone touts the great growth of the current real estate market. Recently the Standard & Poors/Case-Shiller Home Price Indices released figures showing a 9.3% increase in home prices in 20 major metro areas. Sounds good hu? Before you get too excited, lets look at some facts.

First, even after the recent price increases, home prices are still about 30% lower than they were at their peak in 2006. Try to rent a vacation home in Cape Coral today vs. 10 years ago and tell me the pricing difference, I dare you. Current prices are at the level of those in 2003. So simply put, prices today are the same as they were were a decade ago. When you couple that fact with the bargain basement mortgage rates of today (that are more than 40% lower that they were in 2003) you realize that any strength being show is largely a result of the mortgage rates. If rates were where they were ten years ago (almost twice as high) I suspect that the housing market would still be sliding down and not climbing up. More “Sell my house fast Thornton” requests coming.

The single family home market was unfortunately fueled by greed and stupidity, a deadly combination. Too many people acted as though it was a huge-profit investment opportunity and it became the equivalent of a Ponzi scheme. New buyers kept paying the profits to the previous buyers, until the bubble burst.  Yes some people made money, but look at how many lost everything. There are far better ways to invest than to count on the “One greater fool theory.”  This theory says that “Even if I was stupid enough to pay too much, there will surely be one greater fool who will pay even more to but it from me.”  That’s just bad business.

If an investor will replace the greed with intelligence he/she can still find excellent ways to build wealth with real estate today. Opportunities abound. Real Estate has always been and always will be the basis of all wealth. It happens every day for those that know what they are doing, and it can happen for you. Good luck.