Other Things

Other Things

Other Things

This market is something. I’d like to think it requires your attention, but it doesn’t. It just requires your engagement. And your motivation. Oh, and several million dollars of your money. I used to think real estate was an art that required some discipline and discernment, layered with a deep understanding of nuance and whim. Now it appears to require only your excitement. Want to buy something, somewhere? Good. Wire the money and voila, it has been done. What if this is just the way the affluent areas of the world work from now on? What if there are no more real estate mistakes, only real estate wins? What if I’ve been wrong this whole time and real estate isn’t delicate or contemplative at all? What if it’s just big and bold and in your face, screaming at you to buy, buy, buy?

I’d like to think this isn’t the way it’s going to be. I’d like to return to a world where dumb real estate decisions are punished. That doesn’t make me sadistic, it just makes me judgement oriented. I admit that I like it when the person who bought the dumbest house on the market ends up taking a bath on it later. I feel this way about houses on highways and houses under power lines. If I’ve done nothing worthwhile in this life, at least I’ve taught my children to avoid this particular brand of housing mistake. On Geneva, we don’t have lakefront homes on interstate highways or lakefront homes under power lines, but we do have lakefront homes next to things that lakefront homes don’t want to be next to. And we have lakefront homes in areas of the lake that aren’t the greatest, even if 2020 has brought gentrification to these areas. I prefer a market that keeps people honest. 2020 is no such market.

I hope the market continues so that the bad mistakes of the past couple of years never have a chance to inflict pain. So that the houses being built in the wrong locations will never have to present themselves to the market and field the skeptical questions from those future buyers. So that the buyers buying lake homes that are nearish to the lake but lack lake access are never forced to compete with lesser priced lake access homes. I hope AMZN and MSFT never have a red day again. And I hope interest rates for thirty year money stay sub three long enough for my children to buy their first homes.

But I know this isn’t going to happen. I know the rates will rise and the stocks will fall, and what then? What happens to the houses in Steamboat and in Park City then? Would you care to know that I looked for houses around Keystone last night? I figured, it’s Keystone, it can’t be that popular. I mean, Keystone? (queue the Keystone defenders). To my relative surprise, it appeared to my eye that 90% of the available homes in the Keystone area were under contract. These are largely not particularly nice homes, I should mention. Ugly ranches and uglier two stories and super ugly mountain modern creations with jumbled gables and dumb vertical siding. Look, it’s rusted sheet metal! That’ll never go out of style, I’m sure of it! But those houses have sold and are selling, and the ones that are listed today will sell tomorrow. To a nice family from Saint Louis, or a not so nice family from New Jersey. Either way, the house will list and the house will sell and for $1M a buyer will capture their own piece of that highway-side raised ranch, complete with shiny off-brand stainless steel appliances and a pleasant hum of the adjacent highway. Now that’s living.

Maybe I’m wrong. Maybe my skepticism isn’t warranted. Maybe the market isn’t attached to the stock market anymore. Maybe there’s a bigger issue at play here, and maybe if the cities are going to burn and loot and tax then maybe, just maybe, everyone is going to want a lake house or a mountain house or something in the country. Maybe I’m the one who is wrong here. Maybe everyone learned something from the last housing crisis, even though it appears to the naked eye today that no one learned a single thing. Maybe the lesson isn’t that housing prices go up and go down, it’s just that housing prices go up and then they go down and then they go up again. Isn’t it the last part that matters the most? If we consider Lake Geneva during the last cycle, we saw prices peak in 2008 and then bottom in 2012 and then reach the same peak again (mostly) by 2016. By 2020? Prices are so far above the peak (in most cases, but not all) we can’t even stop to look back at them. Maybe the lesson learned isn’t that prices can be volatile, it’s that even during one of the greatest housing crashes ever witnessed, prices, in a span of 8-10 years, completely and entirely recovered.

Are you buying a lake house for next summer? Don’t. Are you buying a mountain house because you want to ski this coming January and you, like me, know that the hotel experience is relatively miserable right now? I beg you not to do it. But if you’re buying a lake house because you want to cash out of some frothy equities and put the money into something you can touch and feel and live in, then do it. If you want to buy something to last for a decade, or two, or three, then do it. The rough edges of this odd year will be smoothed by time, and you’ll be glad you’re in a place with other similarly committed ownership. Maybe my housing take has been wrong all of these years. Maybe it isn’t confidence or fear that drives markets but instead it’s little more than the fear of missing out. Either way, I’ll be here to help you apply a touch of discernment and maybe some caution, in case you’re the sort that appreciates that sort of thing.

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