What I wanted to point out is that most of Colorado have done unbelievably well in price appreciation. Now, that might not be good news to you: the increase in value is a function of how many people now live in the state, with the increased social issues, traffic, etc. For those of you that find all these people and issues troubling: one could say that you have been compensated for your troubles – if you owned real estate.
The other key aspect to note regarding our overall real estate market: rental prices are going up
, especially for apartments. For multi-family, rental prices are up close to 20% this year for certain suburbs. Combining single-family and apartments, the estimate is that rental prices are up 10% for this year.
Finally, here are a few other anecdotal items on my mind that I am keeping an eye out for:
- People trading stocks while intoxicated. “According to a new survey from consumer finance website MagnifyMoney, 32% of U.S. investors say they have made trades while drunk. Gen Z members fell into the trap the most of any generation, with 59% confessing to drunk trading, while 9% of baby boomers admitted to trading under the influence.” What else is there to say? Contrast this ultimate irresponsibility with the following story. Many years ago a cousin on the other side of my family was asked to invest in the company he helped me get hired at. Why did he not invest? His reply to me was, “I only invest in things that I absolutely know and understand.” This was from a guy who was worth mid-eight figures (and not that much older than me).
- People who are day trading cryptocurrencies. Again, anecdotally, I have run into quite a few people who are making much, some of them say all, of their income trading crypto.
- Finally, it’s ‘Prom Night.’ No, not that prom night. I have mentioned to quite a few people that this last year feels like a combination of 1999 and 2006 all over again, in terms of the giddiness and flushness with cash that leads to lots of spending. People seem to be spending money like it’s going out of style. Listening to Robert Kiyosaki on a podcast recently, he did a much better job of summarizing this phenomenon. Essentially he was saying (in jest) that ‘it’s time to sell’. “At the top of a market, people are the happiest.” He continued with what he called the ‘Prom Night’ indicator, “When markets are really high, everybody’s happy and they are spending money,” and that is most often at the top of a market. He said what comes after is the crash, and there is nothing bad or wrong about a crash, because “a crash cleans house.”
Now I have no idea what’s ahead. I tend to gravitate towards Kiyosaki’s comments. Many people are pronouncing that real estate can’t crash – there’s too much demand and way too little supply. They say, “I don’t see how this could end any time soon.” Or, “There’s no way real estate can crash.” Okay, fine.
“Lots of things can go on for a long time that don’t make sense. Eventually, they come to an end.”
– Warren Buffett
The drum I will continue to beat: Real estate is a fabulously unique asset. There are also very real reasons to transact in real estate at any time. Having said that, the theme I have not strayed from: I would rather be ready (and my clients too) for things to go either way, than absolutely certain they could only go one way.
“It’s not what we don’t know that gets us into trouble. It’s what we know for sure that just ain’t so.”
– Mark Twain