Real Estate Investing is About More Than The ‘Doom & Gloom’ of the Media Headlines

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Surprisingly Gloomy Headlines Betray the Real Story

I’ve always heard that negative news stories, whether on TV or in the paper, always sell better than the happy go lucky story.  That trend seems to be true recently as I have noticed nothing but negative news stories on the state of the real estate industry. 

I have two theories as to why this is happening right now…

1.  The news is talking to the wrong people.

2.  Everyone is looking in the wrong direction to figure out where the market is heading.

As for talking to the wrong people, I believe it is fairly simple.  Right now, investors are leading the real estate industry and allowing for, at least, some semblance of stability to exist in various markets around the country.  Unfortunately, there are not enough investors connected with the media to get recognition and coverage.  Instead, when the media need a story and want to print a current outlook on the real estate industry, they turn to local real estate agent associations and unless they happen upon the right agent, the doom and gloom begins to pour out.

Whether it is a down assessment on jobs, a dim outlook on future building or a slow forecast for sales, all of the news I am seeing lately points to a lousy real estate market and no real outlook for recovery anytime soon.  As always, real estate is a hyper-local market business and many reading this post may be in markets where the news is fantastic and the real estate market is already in recovery mode or never really lost steam only value.  If that is the case, you may not understand what many of us are seeing from media coverage.  As an example, just last week there was a local story that highlighted the dismal state of the real estate industry.  Two people interviewed who have credibility in the industry lamented that real estate agents are feeling the pain of a lack of sales, low price points and few retail buyers while the local builders association meetings have digressed to the point of announcing births and weddings to highlight good news.

Meanwhile, real estate investors made up nearly 30% (I believe the actual number to be higher) of the sales in 2010 and accounted for millions of dollars in acquisition and repair to neighborhoods across the same city.  Those who have been trained under a strict real estate agent background, may not have the expertise and insight to actually see the unbelievable potential and opportunity that this current real estate market presents.  While price points may be down, foreclosure notices may be up and there may be fewer retail sales, that does not mean the real estate industry is weak.  Many cities are seeing an influx of real estate investors who are looking for quality investment properties and are often purchasing multiple properties.  The opportunity to develop a different type of buyer exists, but it requires a different way of approaching potential clients.

As far as looking in the wrong direction is concerned, all of the numbers being reported today by real estate professionals to the media are comparing past price points, past values and past trends to the reality on the ground today.  Unfortunately, many parts of the country will not see past numbers again for some time if ever.  Instead of looking to the past, the story that needs to be told is the future.

Most quality real estate investors will tell you that they do not look at past performance to give them any real insight into an investment property.  What a property may have sold for in the past is much less relevant than the factors that will help it sell in the future.  The real estate market is so different today that past analytics simply do not paint a picture that is relevant.  When real estate professionals discuss the poor real estate market when compared to the past, they are failing to acknowledge this fact.  What is absolutely relevant is what is taking place today and what is going to take place in the future.  What is happening to the growth of the city?  What is happening in the job production market?  Is the particular areas GDP growing or shrinking?  Is the political establishment working to entice job and city growth or are they stifling growth?  These are questions that are much more relevant to rental rates and home values than what was happening during the heyday of real estate irresponsibility.

With a little effort on our part as real estate investors, hopefully we can turn the headlines around and point out to the news media that there is indeed a group of real estate professionals who are not only succeeding and thriving in this market, but are also growing.  Meanwhile, we’ll save the birth announcements and wedding save the dates for the doom and gloom side of the business.

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About Author

Chris Clothier

In 2005, Chris Clothier (G+) began working with passive real estate investors and has since helped more than 1,100 investors purchase over 3,400 investment properties in Memphis, Dallas and Houston through the Memphis Invest family of companies.

15 Comments

  1. I agree with you completely Chris. I believe that when everyone looks back on this time, it will be real estate investors that ultimately put homeowners and tenants in a large number of those vacant houses. These same investors will be the ones that clean up many of the neighborhoods and make the homeowners proud of where they live once again. We really don’t see much of that in the news do we?

    I will be interested to see if the pilot program that the Federal Government plans to roll out to real estate investors gets off the ground and gets some of those foreclosures off the books.

    • Chris Clothier

      Sharon –

      Lets stay in touch with the roll out of the new government program. It is going to be interesting how many investors are actually able to participate.

      In the meantime, keep sharing the good news and getting our story out.

      All the best,

      Chris

  2. Chris: The type of backward-looking philosophy you are talking about has been going on for some time now. You make a good point about the weaknesses inherent in looking back, after all, the dynamics of the market at that time were dramatically different and bear little resemblance to what we see today. From an investment standpoint, it’s interesting to remember that today’s prices are nothing more than the present value of future benefits – future being the operative word. The doom and gloom may sell papers, but it’s taken from the wrong perspective, as you point out.

  3. Chris, I’ll take your theme one step forward. When I see the press talking about Real Estate is Back and will never fall again I will be looking for the exit sign and ways to protect myself

    Thanks for another great article

  4. Jeff Brown

    It’s funny, Chris — If I was counting on my rearview mirror to help me make the crucial decisions about when/where/how to invest, I’d never have left San Diego’s investment market, and surely wouldn’t be anywhere near Texas.

    Excellent stuff, Chris.

  5. Thomas Dickenson on

    I so agree with your statement that pointed out “Instead of looking to the past, the story that needs to be told is the future.” It would not help if we continue to look back and refer to the past cloudy days of RE and the economy. But using it as motivation to get up and work on more improvements would be a good idea. There is always hope if we only work for it positively!

    Thanks for sharing this interesting post, Chris!

    • Chris Clothier

      Thomas –

      Great points. I am a big believer in sharing what is really happening in the real estate market that digs well beyond the traditional set of numbers that are always talked about.

      Thanks for reading and posting your comments.

      Chris

  6. They say that fear is the biggest motivator all human beings have, and that’s what these news are trying to do. they try to invoke fear in order for the reader to take whatever action they want them to take. i think that the real estate market is i recovery mode right now. They say that even in the worst conditions, there is still be a chance for a few people to turn that into their advantage, and that’s why there are some bright investors who have adapted the present conditions and they are making a lot of profit as a result to that change. thanks for the insights Chris.

    M Mark

  7. Thanks for the intersting read! I think you make some excellent points about local real estate, and what they report, or even more so what the news outlets cover. The sad part is we (in general) just take the news at face value, and do not educate ourselves. (Of course I believe real estate investors are more in tune with alternatives… aka creative real estate investing).

    I have been following Peter Schiffs views lately, funny he is one of the few to get it right back in 2006, when all these other talking heads were literally laughing at him. Here is the clip of that…http://youtu.be/2I0QN-FYkpw

    This clip is his current economic forecast, and I have to tell you, it all makes 100% perfect sense!
    http://youtu.be/5EYVss0i83s

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