Networking and Educational Opportunities
This will be my 3rd downturn experienced as a real estate agent. I survived the 1st 2. Frankly I am afraid this time. This downturn will probably outlast the 1st 2. There are 3 choices available. 1) I can get a job in a convenience store or a fast food restaurant. 2) I can hunker down, cut expenses, and be like a turtle in a shell until the storm blows over. 3) I can find a way to prosper because of the downturn.
Admitted, I am on the edge of option 2 right now. If I don’t cut expenses, I will not have the capital to attempt option 3. I don’t know what option 3 is. Next week I will spend Monday in Miami at a special pre-convention (NAR) conference with international practitioners from around the world. Picking the brains of the best real estate agents on the planet will be my priority.
Tuesday, I will go to Orlando for the NAR convention. With all of the opportunities offered there, if I don’t at least get a clue for option 3, it will be time for option 1. You can be there too. We can talk. Maybe we can help each other. Register at: http://www.realtor.org/meetings_and_expo . I would much rather see you there than at the convenience store.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Friday, October 31, 2008
Wednesday, October 29, 2008
The Global Financial Crisis and Real Estate (part 7)
The Global Financial Crisis and Real Estate (part 7)
In conclusion of this series, let me say no one really knows what is going to happen to the real estate markets as a result of this crisis. A lot of the results are manifesting now. The really big question is how much of what’s happening is a result of temporary fear and how much is long term and more or less permanent. There is no doubt that subdivisions with poorly constructed homes and many foreclosures have a potential to become new slums. There is no doubt that some markets were severely overpriced.
The positive factors are that the population is still increasing. People need a place to live. How many of them will settle for less than they had before? There is a lot of cash around. Sales of municipal bonds are doing very well. That cash will have to go somewhere when the fear portion of this debacle is over. Will it go into investments that benefit the general world economy or will it go into gold bars and similar static investments? What will happen when the money starts moving again?
Will there be a pent up demand, or will the austerity learned in the hard times prevail? My parents were raised during the great depression. My mother turns out the lights when she leaves a room. Even though the price of gasoline is dropping, usage is still going down. Is this the current economic situation; or are habits permanently changed? Only time will tell.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
In conclusion of this series, let me say no one really knows what is going to happen to the real estate markets as a result of this crisis. A lot of the results are manifesting now. The really big question is how much of what’s happening is a result of temporary fear and how much is long term and more or less permanent. There is no doubt that subdivisions with poorly constructed homes and many foreclosures have a potential to become new slums. There is no doubt that some markets were severely overpriced.
The positive factors are that the population is still increasing. People need a place to live. How many of them will settle for less than they had before? There is a lot of cash around. Sales of municipal bonds are doing very well. That cash will have to go somewhere when the fear portion of this debacle is over. Will it go into investments that benefit the general world economy or will it go into gold bars and similar static investments? What will happen when the money starts moving again?
Will there be a pent up demand, or will the austerity learned in the hard times prevail? My parents were raised during the great depression. My mother turns out the lights when she leaves a room. Even though the price of gasoline is dropping, usage is still going down. Is this the current economic situation; or are habits permanently changed? Only time will tell.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Monday, October 27, 2008
The Global Financial Crisis and Real Estate (part 6)
The Global Financial Crisis and Real Estate (part 6)
Now we will discuss the office sector. I confess to having less knowledge and less interest in this sector than any other. Traditionally the office sector leads downturns and lags in recoveries. This downturn has been exceptional in that the office sector has been almost the last to feel the effects. The effects are being felt now as expansion plans are cancelled or put on hold. Financial sector companies are going under or merging. Even manufacturing and other service industries are cutting back on office workers. When the beehive prepares for winter they drive out the drones. This is happening in the business beehives now.
I see some hope in the possibility of a new industry. The governments are announcing investment and guarantees in huge proportions. I see a whole new group or consultants coming in to the mix to teach companies how to get this money and to teach executives how to steal it. Who knows how much office space these people will need. They may just work out of luxury beach houses in offshore banking havens.
Whatever happens, many of the 1st tier cities are finding themselves with considerable oversupply of class A office space. By the time the recession turn around much of this property will have been foreclosed or sold cheaply.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Now we will discuss the office sector. I confess to having less knowledge and less interest in this sector than any other. Traditionally the office sector leads downturns and lags in recoveries. This downturn has been exceptional in that the office sector has been almost the last to feel the effects. The effects are being felt now as expansion plans are cancelled or put on hold. Financial sector companies are going under or merging. Even manufacturing and other service industries are cutting back on office workers. When the beehive prepares for winter they drive out the drones. This is happening in the business beehives now.
I see some hope in the possibility of a new industry. The governments are announcing investment and guarantees in huge proportions. I see a whole new group or consultants coming in to the mix to teach companies how to get this money and to teach executives how to steal it. Who knows how much office space these people will need. They may just work out of luxury beach houses in offshore banking havens.
Whatever happens, many of the 1st tier cities are finding themselves with considerable oversupply of class A office space. By the time the recession turn around much of this property will have been foreclosed or sold cheaply.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Friday, October 24, 2008
The Global Financial Crisis and Real Estate (part 5)
The Global Financial Crisis and Real Estate (part 5)
The worldwide outlook for industrial properties will be mixed. While there is some slow down in employment and demand for manufactured goods will inevitably decrease. This is a slower situation. Companies that stay in business can cut production easily enough by laying off workers. It is more difficult to reduce or eliminate facilities. By the time these reductions are accomplished the demand should have rebounded. Demand for large new facilities will probably decline somewhat.
The property sector that usually benefits from a turndown in the general economy is the smaller industrial and warehouse properties. Middle managers get laid off. They either look for another position, retire or start their own business. This third alternative should make demand for small buildings increase. The big question in this particular turnaround is the loss in asset value in the financial markets. These middle managers typically fund their new ventures from their retirement account or stock portfolios. They may not care to liquidate these funds under the present economic conditions.
In emerging markets there is still some fairly strong demand from internal consumers. Perhaps this will last until the general market improves and leave these markets relatively untouched. Even where they do have some slowdowns they may actually be helpful. In China’s case, for example, the economic growth is expected to slow from 11% to 9%. This could allow their infrastructure to catch up with their other growth.
Next we will examine the office sector
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
The worldwide outlook for industrial properties will be mixed. While there is some slow down in employment and demand for manufactured goods will inevitably decrease. This is a slower situation. Companies that stay in business can cut production easily enough by laying off workers. It is more difficult to reduce or eliminate facilities. By the time these reductions are accomplished the demand should have rebounded. Demand for large new facilities will probably decline somewhat.
The property sector that usually benefits from a turndown in the general economy is the smaller industrial and warehouse properties. Middle managers get laid off. They either look for another position, retire or start their own business. This third alternative should make demand for small buildings increase. The big question in this particular turnaround is the loss in asset value in the financial markets. These middle managers typically fund their new ventures from their retirement account or stock portfolios. They may not care to liquidate these funds under the present economic conditions.
In emerging markets there is still some fairly strong demand from internal consumers. Perhaps this will last until the general market improves and leave these markets relatively untouched. Even where they do have some slowdowns they may actually be helpful. In China’s case, for example, the economic growth is expected to slow from 11% to 9%. This could allow their infrastructure to catch up with their other growth.
Next we will examine the office sector
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Monday, October 20, 2008
The Global Financial Crisis and Real Estate (part 4)
The Global Financial Crisis and Real Estate (part 4)
Who knows how long it will take to sort out the financial part of sub-prime mortgage crisis and the real estate bubble. The bubble will take care of itself. There will be scars. There will also be some very good deals. The actual dollar losses to the failed mortgages have already been written down for the most part. When some money comes back on a lost cause, that will be positive for the financial industry. The real problem will be with us for many years to come.
The real problem is sub-prime properties and sub-prime borrowers. Many of the properties that were financed under sub-prime mortgages were really shoddy construction in really depressing settings. People who could not even rent a home from a diligent landlord were desperate enough to take these “blessings”. Much of the “cost” in these transactions went to pay off appraisers and mortgage brokers and give cash advances so the buyers could resolve old debts in order to qualify for the loans. Less than normal “cost” went into labor and building materials. This left a crummy house with no equity, which will remain long after the foreclosure is done.
Then there are the sub-prime buyers. There were many honest, quality type people who got sucked into this situation by crooked “professionals”. There were a lot of people who should have been left sleeping under the bridge. These people will need a lot of counseling and rehab before they are even qualified to rent a property much less own one.
Next edition will be on industrial property.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Who knows how long it will take to sort out the financial part of sub-prime mortgage crisis and the real estate bubble. The bubble will take care of itself. There will be scars. There will also be some very good deals. The actual dollar losses to the failed mortgages have already been written down for the most part. When some money comes back on a lost cause, that will be positive for the financial industry. The real problem will be with us for many years to come.
The real problem is sub-prime properties and sub-prime borrowers. Many of the properties that were financed under sub-prime mortgages were really shoddy construction in really depressing settings. People who could not even rent a home from a diligent landlord were desperate enough to take these “blessings”. Much of the “cost” in these transactions went to pay off appraisers and mortgage brokers and give cash advances so the buyers could resolve old debts in order to qualify for the loans. Less than normal “cost” went into labor and building materials. This left a crummy house with no equity, which will remain long after the foreclosure is done.
Then there are the sub-prime buyers. There were many honest, quality type people who got sucked into this situation by crooked “professionals”. There were a lot of people who should have been left sleeping under the bridge. These people will need a lot of counseling and rehab before they are even qualified to rent a property much less own one.
Next edition will be on industrial property.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Thursday, October 16, 2008
The Global Financial Crisis and Real Estate (part 3)
The Global Financial Crisis and Real Estate (part 3)
Residential property markets are much more complex that retail. In most of the emerging market countries, internal demand is keeping the markets moving if not robust. The buyers in these markets are used to paying cash or a very high percentage of the price in cash. The entrepreneurs in the countries are used to making something out of nothing. There local use markets should suffer very little disruption. The 2nd home market that has been helping the more exotic locations will probably suffer some. The bargain hunters will reap a harvest. The builders and developers will lose some profit and have higher sales costs. The good ones will survive.
To make predictions in the developed economies is harder. Dr. Lawrence Yun made a speech about the BRIC countries at the Brazil Summit last month. He said the 3 things that emerging (real estate) markets need to advance are 1) Access to financing, 2) Mobility of the populations 3) Reduction or measurement of risk. This last really means transparency, economic freedom and respect for property rights. Even though he was talking about emerging markets, I see the relevance in the developed markets. Right now no-one really wants to buy because of uncertainty (risk). People who are mobile are unable to sell the homes they already own; so they have to rent.
The rental home market is still good in Charlotte. I have a feeling that in markets where there are a lot of foreclosures, there may be a lot of houses available and many unqualified renters trying to rent them. How many landlords will make the same mistakes the banks did?
Next posting will be a continuation of residential.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Residential property markets are much more complex that retail. In most of the emerging market countries, internal demand is keeping the markets moving if not robust. The buyers in these markets are used to paying cash or a very high percentage of the price in cash. The entrepreneurs in the countries are used to making something out of nothing. There local use markets should suffer very little disruption. The 2nd home market that has been helping the more exotic locations will probably suffer some. The bargain hunters will reap a harvest. The builders and developers will lose some profit and have higher sales costs. The good ones will survive.
To make predictions in the developed economies is harder. Dr. Lawrence Yun made a speech about the BRIC countries at the Brazil Summit last month. He said the 3 things that emerging (real estate) markets need to advance are 1) Access to financing, 2) Mobility of the populations 3) Reduction or measurement of risk. This last really means transparency, economic freedom and respect for property rights. Even though he was talking about emerging markets, I see the relevance in the developed markets. Right now no-one really wants to buy because of uncertainty (risk). People who are mobile are unable to sell the homes they already own; so they have to rent.
The rental home market is still good in Charlotte. I have a feeling that in markets where there are a lot of foreclosures, there may be a lot of houses available and many unqualified renters trying to rent them. How many landlords will make the same mistakes the banks did?
Next posting will be a continuation of residential.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Monday, October 13, 2008
The Global Financial Crisis and Real Estate (part 2)
The Global Financial Crisis and Real Estate (part 2)
So…To define the crisis. The stock market is dropping like a rock. People think the banks aren’t lending. The banks aren’t lending to each other. Whether from fear or prudence companies are cutting back everywhere they can. Families and individuals are looking at retirement plans that have been diminished on paper. They are cutting all unnecessary spending right as we come into the Christmas season. This is the time when retail operators balance their books. The retail operators know their books will not balance this year.
What we have is a disastrous non flow of money. It is mostly, not all, due to fear. How does all of this trace back to the sub-prime crisis and the housing bubble? The housing bubble comes from greed and stupidity. The sub-prime crisis comes from greed and dishonesty. What will be the effect on the real estate business? Let us examine one sector at a time.
Retail…The grinch that stole Christmas is probably going to get away with it this time. A lot of retailers are going to go broke. A lot of shopping centers are going to have empty spaces. A lot of big boxes will be standing dark. How many of these properties, especially the big boxes, were built by developers and sold to investors at very low cap rates based on credit tenants? These properties, if they rent at all, will not command the same rents they did originally. Some will certainly go into foreclosure. Will they sit empty until the next boom? Will they become flea markets and truck driving schools or churches? The shopping centers will also lose income and therefore value. There will be buying opportunities for patient capital. That patient capital better have some reserves for renovation in the next boom. No-one wants a shopworn old property.
Part 3 will examine other market sectors.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
So…To define the crisis. The stock market is dropping like a rock. People think the banks aren’t lending. The banks aren’t lending to each other. Whether from fear or prudence companies are cutting back everywhere they can. Families and individuals are looking at retirement plans that have been diminished on paper. They are cutting all unnecessary spending right as we come into the Christmas season. This is the time when retail operators balance their books. The retail operators know their books will not balance this year.
What we have is a disastrous non flow of money. It is mostly, not all, due to fear. How does all of this trace back to the sub-prime crisis and the housing bubble? The housing bubble comes from greed and stupidity. The sub-prime crisis comes from greed and dishonesty. What will be the effect on the real estate business? Let us examine one sector at a time.
Retail…The grinch that stole Christmas is probably going to get away with it this time. A lot of retailers are going to go broke. A lot of shopping centers are going to have empty spaces. A lot of big boxes will be standing dark. How many of these properties, especially the big boxes, were built by developers and sold to investors at very low cap rates based on credit tenants? These properties, if they rent at all, will not command the same rents they did originally. Some will certainly go into foreclosure. Will they sit empty until the next boom? Will they become flea markets and truck driving schools or churches? The shopping centers will also lose income and therefore value. There will be buying opportunities for patient capital. That patient capital better have some reserves for renovation in the next boom. No-one wants a shopworn old property.
Part 3 will examine other market sectors.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Sunday, October 12, 2008
The Global Financial Crisis and Real Estate (part 1)
The Global Financial Crisis and Real Estate (part 1)
Disclaimer: I do not know what will happen. I am just making this up like the real pundits do.
I guess the real question is, “Who will be affected, how and why?” That question leads back to the question “What is the crisis?” and “Is this a financial crisis or a confidence crisis?” The answer to the last question comes first. This is a financial crisis that stems from a confidence crisis that comes from a financial mess. The foreclosures themselves should not cause a crisis of the magnitude we face. Nor should the “real estate bubble”. Even together these two crisis should not cause a problem this big. There are not enough losses from foreclosures to do this. The “real estate bubble” was caused by speculators and most of them took the hit on their balance sheets and went on with their lives.
These two situations should have actually caused a bonanza for real estate professionals. They did not. There should have been some really great buying opportunities. There are not. That goes back to the definition of the crisis. That will come in part 2.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Disclaimer: I do not know what will happen. I am just making this up like the real pundits do.
I guess the real question is, “Who will be affected, how and why?” That question leads back to the question “What is the crisis?” and “Is this a financial crisis or a confidence crisis?” The answer to the last question comes first. This is a financial crisis that stems from a confidence crisis that comes from a financial mess. The foreclosures themselves should not cause a crisis of the magnitude we face. Nor should the “real estate bubble”. Even together these two crisis should not cause a problem this big. There are not enough losses from foreclosures to do this. The “real estate bubble” was caused by speculators and most of them took the hit on their balance sheets and went on with their lives.
These two situations should have actually caused a bonanza for real estate professionals. They did not. There should have been some really great buying opportunities. There are not. That goes back to the definition of the crisis. That will come in part 2.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
Friday, October 3, 2008
Communication in Brazil
Communication in Brazil
One of the greatest challenges in the “Flat World” is staying in the flat part. By this I mean maintaining communication. Communication and technology are two of the things that have really flattened the world. Unfortunately, it seems that every part of the world accesses technology differently.
The international cell phone that Verizon wireless requires has dual modes. CDMA and GSM. One has to know which to use and how to use it whenever crossing borders. In the USA most companies use CDMA. In Europe and parts of Asia GSM is the standard. China is the exception. Their phones are CDMA. Argentina requires a special Vodafone phone for Verizon. AT & T phones work with the standard international phone (when they work at all). Brazil works (more or less) with the Verizon phone; but setting it is different. One has to select a GSM service to make outgoing calls and the procedure for placing the call is different.
The service provide may have to be changed as one moves about. VOIP (voice over internet protocol) has become my favorite way to stay in touch when possible. It is almost free and very reliable if one has a good broadband connection. A slow or flaky connection means broken or static communication. My wife says that my telephone has the hiccups.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
One of the greatest challenges in the “Flat World” is staying in the flat part. By this I mean maintaining communication. Communication and technology are two of the things that have really flattened the world. Unfortunately, it seems that every part of the world accesses technology differently.
The international cell phone that Verizon wireless requires has dual modes. CDMA and GSM. One has to know which to use and how to use it whenever crossing borders. In the USA most companies use CDMA. In Europe and parts of Asia GSM is the standard. China is the exception. Their phones are CDMA. Argentina requires a special Vodafone phone for Verizon. AT & T phones work with the standard international phone (when they work at all). Brazil works (more or less) with the Verizon phone; but setting it is different. One has to select a GSM service to make outgoing calls and the procedure for placing the call is different.
The service provide may have to be changed as one moves about. VOIP (voice over internet protocol) has become my favorite way to stay in touch when possible. It is almost free and very reliable if one has a good broadband connection. A slow or flaky connection means broken or static communication. My wife says that my telephone has the hiccups.
David Segrest is a REALTOR in Charlotte NC. His website is http://www.segrestrealty.com His email is david@segrestrealty.com
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