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RENO REAL ESTATE GOLDEN 'TIP': CUT YOUR LOSSES SHORT

Ladies and gentlemen:  this is going to be a short post--cut your losses short.

The Reno real estate market topped August of 2005:

 

Let's say that there is absolutely no way that we would have known about this.  As the chorus goes " nobody can't predict what the future holds"--(which I don't buy.)

Market topped, on it's way to avalanche down for the next...well, up until now.  So is this the end of the world?

No. 

Reno homes median price:

June 2007:  $319,900

June 2009:  $184,044

(click to enlarge)

Ladies and gentlemen, even if we were a year late in learning about the market crash, we could've still saved $135,000.

Cut your losses short.  We can never be right 100% of the time but if we cut our losses short we would live to see another day and avoid being wiped out.

bravery: the new "bad"

  By: Osvaldo Zoom

We have to be accountable to ourselves. 

Momma and Poppa is not here anymore to punish us for bad behavior.  And we can't trust our leaders to protect us from ourselves (regulatory boards).

Rugged individualism is overrated.  Self-discipline and integrity are easily advertised than done. 

The new bad is brave. 

Courage to run the other way from a beautiful woman when you know you're not supposed to be there.  To risk going broke instead of flowing through the tide of issuing bogus loans.

There are scores of brave men and women out there.  We don't usually hear or read about them, I guess it's not as catchy as the latest senator caught canoodling with her secretary. I don't think they would want to be in the spotlight anyway. 

Herein lies the irony--people who are most qualified  to lead rarely have the ambition for it.

But fret not, they're there. 

 

"The external world is remarkably consistent, and yet we blame it for what's going on inside of us."

Once in a while I let my post stray away from real estate.

This one is from Seth Godin (marketing freak / genius):

(Full Post: The Confusion)

"The external world is remarkably consistent, and yet we blame it for what's going on inside of us. People who think the world is going to end always manage to find a new thing that's going to cause it to end. People itching to be bummed out all day long will certainly find an external event that give their emotion some causal cover. The thinking happens long before the event that we blame the thinking on."

And he goes on to say:

"Products are remarkably similar, yet we use their marketing stories as an extension of our self-image and self-esteem. Should a new phone really make you that happy?"

I am a avid student of advertising and marketing, been one for the last five years.  I live and breath Ogilvy's selling wisdom--give facts, test your ideas, "ninety-nine percent of advertising doesn't sell much of anything."

But spending billions of dollars to know what triggers my biochemical circuitry is borderline flagrant:

"Marketers spend billions of dollars identifying common biochemical events, and then they launch products and services with stories that align with those events. As a result, we spend money on external forces in an attempt to heal internal pain. Marketers want the equation to be, "if you buy this, everything will be all right.

I wish it were so easy"

Full Post: The Confusion

PUNDITS AND EXPERTS: ARE RIGHT--FIFTY PERCENT OF THE TIME (AT BEST)

by: peter prodoehl

"Analysts expect..."

"Wall street insider says hold on..."

"Morgan Stanley economist downgrades stock..."

"Chief economist for NAR expects market to bottom by 2007..."

"Nancy Grace says man needs harsher punishment..."

"Moody's downgrades stock to AA rating..."

We can't escape them.  They're on T.V, newspapers, internet and airport TV's.

After keeping a close ear on them (real estate and stock market analysts) the last five years I judge that they have a fifty percent chance of being right.   And I'm being generous.

Reality is we only have twelve hours of productive time (outside sleeping, eating, pit stops) and it is hard to read everything we need to know to make the best decisions.  So we depend on other's opinion--anywhere from should we watch Star Trek to when is the best time to buy a house.

So I'm not hating on pundits.  I'm offering a word of caution.  Be careful.  They're not as smart as they look.

Question everything.  Not for argument's sake but for understanding (illumination).

And you will go far.

The reason why we believe easily

superb photo by: jamkyleseyes

I was tempted to use 'gullible'.  But we're supposed to believe authority.

I'm talking about real estate reporting.

When it comes to real estate, people are easily swayed.  You have the T.V, newspaper, uncles, opinion websites--all clamoring for our ear's attention.

I've been following them the past three years, and from what I've heard them say and what transpired, 80% are bunk and disappointingly late (mainstream news being #1).

I sound like a madman, I'm aware--but what really gets to me is that thousands of people look to the news for advice and yet these networks are not doing their job right.  I don't expect them to be perfect in their research / predictions, but they need to do their homework in a more efficient manner.

And people believe the news because we're supposed to, right? Well, back then we can, now I'm not so sure anymore. 

But the question is how can we protect ourselves from being financially hurt by misleading news and experts?

My solution is very simple--get to know the market for yourself; median price, and supply & demand.  That's not too hard right? I don't think it'll cost yo u more than an hour.  But the rewards are magnificent. 

Get to know the market, you'll get the best advice.

What we can learn from the madoff whistleblower--Harry Markopolos

superb photo by: Danille Greene

"I firmly believe that any man's finest hour, the greatest fulfillment of all that he holds dear, is that moment when he has worked his heart out in a good cause and lies exhausted on the field of battle - victorious."

                                                                                -Vince Lombardi

Harry Markopolos was assigned by his boss at Rampart Investment Management to learn how they could match Bernard Madoff's double-digit returns.

Instead he found that the "world's biggest hedge fund is a fraud".

I first read about him yesterday while I was browsing through wired magazine.  And one word that kept coming out of Markopolos' mouth was "rigorous"--how this has escaped out of our work. 

I was at my $500,00 listing last week and one of the kitchen cabinets had an ugly, white paint drip stain; this was put into my attention by the tenants, "we've lost pride in the quality of work" she whispered.  

Harry Markopolos, an ex special operations major in the army reserve, waged a ten-year (TEN YEARS!) crusade to unmask Mr. Madoff as a swindler was so frustrated with the regulator's refusal to listen that he offered to go in disguise and undercover to gather evidence.

"Each of us feared for our lives," Mr Markopolos said. "If he'd have known my name and known he had a team tracking him, I didn't think I was long for this world."

Gentle reader, do you want to know how long it took for Mr. Markopolos to realize Mr. Madoff's purported investment returns were impossible? Five minutes.  And ten years to dig up evidence.  But he knew right off the bat that it was impossible for Bernard Madoff to net his clients 10% year after year--bull or bear market.

Can you blame the guy when he clamored for the senior officials of the SEC (securities and exchange commission) to be sacked, "the SEC staff now is 3,500 chickens, and we need to get some foxes in there," he said. The organisation continues "to roar like a mouse and bite like a flea".

Friends, and this is the first time I'm going to say this, five minutes is all we need to get ahead in the Reno real estate market.  Check median price, supply and demand--and you'll be ahead of the 80% of the other buyers/sellers.  By studying these, the market will be clearer--making your investment decisions sharper.

And just like his journey, it can be lonely.  Many people settle for second hand opinion and even encourage you to do the same.  Don't listen to them, it's not hard to find the raw information yourself ("5 minutes").  And if you want to dig even deeper, that's even better!

If you do this, you will be ahead by leaps and bounds.

Saying "NO" even if it means getting fired

I was reading an article on Investors Daily. 

Citigroup's stock price is $1.50.  Unbelievable.

If you told me a year ago that Citigroup and Bank of America's stocks will be close to nothing, I would probably say "and the moon is made of cheese".  I mean these are the financial behemoths of the world.  They're just too big to crumble.  Truth be told, these companies are long deceased if not for the billions of dollars our government showered them. 

But lambasting these companies is not what I'm writing this for, we have too many reporters doing that already.  Like it's helping anybody--you should've reported this a long time ago! Where are the Carl Bernstein's and Bob Woodward's of today??

One of the saddest days in the history of mankind is when mainstream news started to follow the pattern of the tabloids.  When watching E! news daily wasn't all that different from our typical 8:00 PM news program--pregnant with hype and sensationalism.  Leave those things to the showbiz guy who has an irritating mustache.

Sorry, I got carried away.

I was watching a special report on the roots of this financial crisis.  What struck me is that these people knew  this was going to happen. Many said their gut said something like this "hey, this can't go on forever, what are you going to do about it?" Some had the good intention of putting a stop in giving these crazy loans, but they just could not. 

They said they didn't have a choice.  If they weren't lenient in lending money, five other companies will be.  And the business will just swing to the competition--business kapoof.  

I sometimes wonder... are their still brave souls out there who will stand up for something they believe in even if it means losing your job or your company? The banking industy's version of John Wayne without the horse. 

"Where have all the cowboys gone?" Are the heart cries of damsels in distresses in main street. 

This is not just a question for "those" people.  This is a question I have to face for myself.

At the end of the special report by msnbc, Alan Greenspan uttered perhaps the most terrifyingly truthful statement of this whole crisis "you know Jim, the sad truth is, years from now, you're going to have this same exact interview." 

"it is almost impossible not to see the Reno real estate market bottom if we're looking at the market"

"keeping a close eye" Superb photo by: Tim Ellis

That's the clincher "if we're looking at the the market". 

Just to be clear, the Reno real estate market hasn't reached a bottom yet.  It's not to say that all markets are in this category.  There is one that looks like it's headed for a bottom: South Reno under $250,000.

It is almost impossible not to see the Reno real estate market bottom if we only look at the market.  People have opinions of what they want the market to do, or what they hope it will do.  But the only thing that matters is what it is doing.  And if we follow that, then it's hard to go wrong.

What do I mean about this? And you may be asking yourself "what do I look for in a market bottom?"

Units sold (demand):

*LTM VS PTM= last twelve months vs previous twelve months

(click image to enlarge)

*Demand leads a market bottom.  Meaning, even before prices reach a bottom demand will have to go up consistently.  More demand means more people wanting the same thing.  Offers will meet the seller's asking prices.  Hence, equilibrium of prices.

Median Price:

(click image to enlarge)

*notice the median price is still in the negative for Reno,Sparks and Carson.  Once this goes into positive territory then we know the market has indeed bottomed.

As you have probably noticed in this post, learning about the Reno real estate market is not that hard.  And a little bit of research will go a long way in helping you gauge the health of our market. 

Keep a close eye on what the market is doing, it will pay handsome dividends in the end.

There's no easy way to get around this

"bittersweet" superb photo by: P.J McAdie

I have a question for you.

And I need is your honest answer.  Have you ever stood in front of your microwave and impatiently pressed the open button at right about seven seconds?

Delayed gratification--not the most popular subject. 

Anthony Bourdain, the wildly followed rebel travel t.v host--one of the rare products of the tube worth giving your hour to.  And why? Fanatical attention to details.  You'll never feel guilty for putting down your book to backpack with him weekdays at 10pm.

It's not easy to find the Bourdains out there, the ones who refuses to settle for good enough.  Especially in our real estate industry.  

This market downturn feels like your high school physics teacher who won't let you pass until you give everything you have. And many times I catch my mind and my body grumbling, "is it even worth it?" "Take the easy way out." "You don't have to deal with this."

But there's no turning back.  The ship has left. 

And you know what? It feels achingly good.  Bittersweet. 

"Do your worst, but I'm here to stay." 

 

Reno home Investors: Keep a close eye on the boy who cries wolf in order to win in the Reno real estate market

Super photo: clownafobier

The lessons I've learned through the story of the boy who cried wolf did not end after I turned eleven.   

Life, as part of the journey is not lacking in shady characters.  Some are deliberately willing to hurt, while others are just sincerely wrong.  I personally think the latter is the more dangerous. 

Observing the Reno real estate market for over half a decade now has taught me some valuable lessons.  People are quick to cry wolf on the market, "buy now, sell now, now is the time to invest!"

For the past two years I've personally heard real estate professionals confidently say that, "the Reno real estate market has bottomed."  Not surprisingly, they were wrong.

And the startling revelation is we usually choose other person's opinion and advice than do the work ourselves.  Especially if it's something we know little of--financial investments. 

"The common people of America display a quality of good common sense which is heartening to anyone who believes in the democratic process."

                                         -George Gallup, Founder of Gallup Poll

I'm not suggesting that we become an isolated-DIY-person.  Far from it.  Quite to the contrary,  gather as much information as you can--be inquisitive.  Get all sides of the story. 

For example:

If you're a first time home buyer in Reno, talk to an aggressive investor who thinks the world of flipping homes but also talk to that older fellow who believes in paying off your home in fifteen years. 

Your goal is not to follow one advice.  The goal is understanding.  

When you have done your homework of understanding for yourself what's happening, you'll easily pierce through the b&%sh--it.

And here's my promise:  "It ain't that hard."  It really isn't.

Start with the basics--Reno real estate supply and demand, Reno Foreclosure reports, Reno real estate in the last six months

..."And life will become a romance"