Outlook For 2006 ~ By Chris Anderson, Ph.D.
January 4, 2006
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As I drive across the state of Florida, I hear a news report from the National Association of Realtors: " Highflying real estate market cooling, existing home sales down 1.7% " . In contrast, just two days ago, I had a conversation with multiple developers who were absolutely ecstatic about the possibility of a little cooling in the market. And just two weeks ago, I met with a major south east developer who was really confused and trying desperately to grasp where the market was going.
If the real estate pros are all over the map in their opinions, then what are you supposed to think about 2006? First off, relax. In every market (real estate, stock, commodities, etc), there is ALWAYS confusion with reasonable balance between views of experts and layman alike. Second, there are excellent ways to build wealth in rising, flat, or declining markets. What is important in 2006, 2007, and beyond, is for you to form your own, educated views of what is likely to happen since that can become the basis of how you evaluate your investments this year.
This year, we are launching our weekly newsletter ( Preconstruction Wealth ) with a series of articles entitled "Outlook For 2006". During January, we will discuss three important components that are needed in order for you to form your own, expert opinion:
- What do we really mean we talk about the real estate market;
- What investments are likely to work in 2006 and why; and
- What investments do we need to be cautious with this year and why.
Today, we will overview each with specifics to come in the next three weeks.
By far, the component that causes the biggest confusion in the media, new investors, and the general lay person is the concept of a real estate market. I get bombarded with the question "What's the market going to do in [fill in the blank of a city or location]" . I am extremely proud (tongue in cheek) to announce that for most of the U.S., I can answer that question with > 90% accuracy!! Unfortunately, most people will not like my answer even though it is very accurate. So what is the answer?
Some investors will make very good money in that market and some investors will lose money.
Argh!!!! What good is that, you might ask and it would be a perfectly fair question. Next week, I will try and convince you that the above statement is true but for now, humor me... Suppose it is true. If you had a chance to ask an expert in a given market, would you still ask them "How is the market going to do?" Hopefully that question is no. Now the question is what would you ask that expert?
Hopefully that answer becomes "how are the investors that are making money doing it in that market". Keep in mind that many semi-professional and profession real estate investors are EXCITED about what they are seeing in the press, especially negative. Once we convince ourselves that some investors will make money and some investors will lose money in almost any market, then we then ask the real questions:
What investments are likely to work in 2006; and
What investments might be hazardous to your wealth.
Once you understand those parameters, now you can develop a solid game plan for the new year.
About The Author
Dr. Chris Anderson is the founder of one of the largest preconstruction groups on the internet today and is referenced in many venues including the New York Times and USA Today. Get access to wholesale property investments today.
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