Perspective on Real Estate

February 23, 2005

March 9, 2005

March 16, 2005

The personal touch needed

If you just can't get real estate out of your system, this column is for you. Real estate is not like stocks; it takes personal attention to detail and the movement of a local market, not a national one.

The San Diego market is remarkable because it is a regional one, spreading far outside the city limits, widening as south as Chula Vista, National City and Imperial Beach.

In addition, it is moving quickly eastward to the whole Imperial County area, skipping over the more contentious and water-short eastern San Diego county that is always fighting to contain sprawl, but not quite freezing the land into huge tracts that defy either marketplace or explanation -- except that it be kept pristine, I guess.

You see, land is the beginning of opportunity, even used land. It's when unpredictability becomes the value-setting tone of an area that value is both enhanced by inflation beyond reason, and punished by how long it may take to get to market.

In a short-term national marketplace, our values go through a contortion that must be understood. Wall Street's preoccupation with mergers, acquisitions and stocks made us into short-term thinkers; this has hurt our economy and businesses which have become obsessed with bigness rather than logic.

Wall Street is possessed by commissions which are earned on -- you guessed it -- mergers, acquisitions and stocks. They react in 30-day cycles or according to the last set of figures -- whichever comes faster.

Real estate professionals must never become tangled in the same value-system; they should, by nature, be long-term players, looking for yield on their cash or total investment. Yes, they can turn over a property much faster if the marketplace is moving rapidly, but their mind-set should be alert to opportunities as well as disciplined to a holding pattern.

Another habit is to look for markets that appear to be accelerating in their action, such as the markets I've already mentioned. People look for the "next markets" and the cycles that appear to engulf them.

The Inland Empire was on fire long before it hit the media, traveling through its evolution as a spillover area of greater Los Angeles and San Diego, having less costly land, speedier entitlement process, and opportunities in redevelopment -- a rare combination and an excellent place to make investments.

As this process matured, it presented greater opportunities than just residential, while also going through an accelerating and predictable pattern of inflation of land and product.

To some that may mean the opportunities are over; to me it means that they have changed rather than ended. Chula Vista is going through a similar pattern, along with El Cajon, while National City is trying to control (or it should) its accelerating pace of inflation.

Remember that the investors and the inhabitants go through two different motivations: the investors depend upon appreciation and the inhabitants want their quality of life to be enhanced while they enjoy the inflation of what they control -- after all that is their nest egg, while to the investor it is the golden egg.

Other areas are explored: is Arizona still a good market? Yes; how about New Mexico? Just be careful as it is not fast-growing Arizona; Utah is filled with possibilities, while care is needed in Nevada and Colorado as traffic-related hold-ups are more frequent delayers of decisions.

As for this region, is it still a good place to invest? You bet, but just know what you're betting on and whether it is for the short or the long term.

Goodkin has been a business ethicist and housing analyst since 1956. He may be reached at Appropriate comments may be published as Letters to the Editor.

February 23, 2005

March 9, 2005

March 16, 2005