March 2018 Monthly Letter
Well, things have picked up speed and we are running fast (sometimes like a hamster on a wheel, other times like the Antelope on the open plains).
The USD Burnham-Moores Center for Real Estate’s Index of Leading Economic Indicators for San Diego County rose 0.6 percent in November, 1.4% in December and another 1.4% in January. December’s sharp rise was fueled by a huge gain in building permits, along with strong gains for online help wanted advertising, and the outlook for the national economy.
January’s gain was the second straight strong increase in the USD Index and the 15th month in a row where it had not fallen. The gain pushed the USD Index to an all-time high of 151.1, surpassing the previous high of 150.8 which was reached in May and June of 2000. Given the strong performance of the USD Index, particularly in the last two months, the outlook for the local economy is positive at least through the end of 2018.
If you are interested in reading perhaps the best 2018 Forecast Report, you will want to read, Emerging Trends in Real Estate by PWC and the Urban Land Institute.
I have mentioned in the past about storm water run off and the clamping down by state and local officials on tenants and owners. There is a free workshop being offered on March 7th from 8:30 to 4:45 of San Marcos City Hall. For more info email; firstname.lastname@example.org .
Another free tip is the Escondido Report It App (you can download from the App store) or Google it online. On the app (or website) you can report (take a picture) the problem (pothole, shopping cart or code violation) and the city will be on it (Sorry Escondido Only so far).
Well as things pick up speed in the market, it is important to stay focused on the fundamentals. The first lesson is actually an African proverb that explains that every morning the Antelope wakes up knowing that it must be faster than the fastest Lion and every morning the Lion wakes up knowing it must be faster than the slowest Antelope Honest to God, I tell people all the time that I am a salesman and I am unemployed every morning when I wake up. And I know that I have to run fast if I am going to eat or at least not be eaten.
The second lesson is to have vision. Now listen carefully to the definition of vision. Vision is the picture of the future that makes you passionate. Get a vision!
The third lesson is to have character. Now your whole life you have probably either been accused of being a character or told to have good character. But here is a working definition you can live by; “Character is the accumulation of all of your habits”. Have good character, it is what you are judged by.
And finally, a little about real estate. We live in an unprecedented time. We are in a time like the Renaissance or the Industrial Revolution. When Christopher Columbus discovered the New World, the fear was that the world was flat. Now with the advent of almost unlimited bandwidth, cell phones and other wireless networks, the internet and online collaboration, the new fear is that the world may indeed be flat. You get paid minimum wage to work hard and you get paid huge sums to work smart.
The next ten years will see labor costs continue to come under pressure as cheaper and smarter work forces are found In China and India. These are not reasons to panic but instead be smarter, have a vision and run faster. Let me give you an example of what I mean and a glimpse of the future. If today in the US, we have 90 smart people and 10 not so smart people. In China we have 100 smart people and 900 not so smart people. Realistically, our competition is 1 on 1 to cater to those 910 people. We just have to be smart enough to adapt and sell to them. I am reminded of the salesman who was sent to Africa to sell shoes. He wired back that there was no market, the people didn’t wear shoes and had no money. The company sent a second salesman and he wired back that the market was unlimited because the people had no shoes! The way around in a flat world is to be smart.
While on the subject of smart, let me tell you about the future of San Diego. World class weather, the beach and outdoor life style will continue to attract the best and the brightest in the world to San Diego. The high cost of land and the low cost to manufacture off shore will cause San Diego’s manufacturing to continue to dwindle. The gap has to be filled with knowledge workers. Yes, I know we are bringing jobs back home under the Trump administration, but it won’t be long until those jobs are replaced by robots and drones and artificial intelligence. (I just hope I can run fast enough to retire by then!). It is important, however, to understand how the real estate economy works;
- JOBs – Think Industrial, Research & Development buildings – for every hard-employed job (manufacturing/knowledge worker) you employ 7 support services (retail, doctor, accountant),
- Houses or Condo’s follow jobs – got to have somewhere to live,
- Retail – shopping follows rooftops (although Amazon is disrupting this),
- Office – services (financial, insurance, medical, real estate follow the houses and retail).
You probably have heard that the three most important things about real estate are; location, location, location. Well, it is not really true. Here is the fact. Buy real estate where more people are moving in than moving out. I am confident that although it may ebb and flow, the smart people of the world want to live in San Diego. You’ve got one leg up on them because you are already here, but you are going to have to stay smart to stay here.
And now for the test…
- Name the five wealthiest people in the world.
- Name the last five Heisman Trophy winners.
- Name five people who have won the Nobel or Pulitzer Prize.
How did you do?
My point is, none of us remembers all the headliners of yesterday. And these are no second-rate achievers. They were the best in their fields. But the applause dies. Awards tarnish. Achievements are forgotten. Accolades and certificates are buried with their owners.
Here is another quiz. See how you do on this one…
- Name a few teachers who aided you on your journey through school.
- Name three friends who have helped you through a difficult time.
- Think of five people you enjoy spending time with. Easier?
The people who make the difference in your life are not the ones with the most credentials, the most money, or the most awards. They are simply the ones that care about you.
God Bless you and remember when you wake up in the morning, run fast and be passionate – we’re in the field running hard for you because we care about you! (I hope you enjoy the things that go through my head before I go to sleep…)
Things that go through my head before I fall asleep.
If you attempt to rob a bank you won’t have any trouble with rent/food bills for the next 10 years, whether or not you are successful.
Do twins ever realize that one of them is unplanned?
What if my dog only brings back my ball because he thinks I like throwing it?
If poison expires, is it more poisonous or is it no longer poisonous?
Which letter is silent in the word “scent”, the s or the c?
Maybe oxygen is slowly killing you and it just takes 75-100 years to fully work.
Every time you clean something, you just make something else dirty.
The word “swims “upside-down is still “swims”.
Intentionally losing a game of rock, paper, scissors is just as hard as trying to win.
100 years ago, everyone owned a horse and only the rich had cars. Today everyone has cars and only the rich own horses.
The doctors that told Stephen Hawking he had two years to live in 1953 are probably dead.
If you replace “W” with “T” in “What, Where and When”, you get the answer to each of them.
If 2/2/22 falls on a Tuesday, we’ll just call it “2’s Day”. (It does fall on a Tuesday).