In theory, the children dance around a circle of chairs, the music stops, and they scramble to find a seat.

Except one.

First lesson – not everyone in real property is guaranteed a seat at the dance.

WHEN TIMES ARE GOOD

Times have been very good in real property for a VERY long time. Yes, the Covid shutdown slowed everything (except demand for housing). We recovered.

There seemed to be chairs to sit for anyone who decided to play the game.

At times, it seemed like there were more chairs than there were competent players available to play.

Even the naive, ignorant, and arrogant could find a real property chair in which to sit.

When debt was cheap, little equity was needed to close a property, and tenants lined up to take space. 

Then the dragon of inflation returned with a vengeance, interest rates soared (in theory to slay the dragon), tenants (at least the big ones) decided they were going to need less space.

Resulting in less chairs.

And less need for players to sit in chairs.

Second lesson – the quantity and quality of chairs available for players varies by the “when” of the dance.

WHEN TIMES ARE UNCERTAIN

In the 1970s, a shift in demand for steel resulted in the shutting down of all the steel mills in western Pennsylvania. 

The real property dance collapsed for a generation. To survive, one moved to growing markets – e.g., Phoenix – where the dance was vibrant and in need of players.

Third lesson – To continue to dance, one may need to move to where there is a dance with chairs available.

In 1986, the demand for more space stopped. Multi-family was the one asset class where attractive debt remained available post-1986 economic collapse. Billions of Wall Street raised equity dollars flowed toward the purchase of apartments. Prices soared. Chairs at the dance – for those who spoke housing – spiked upwards.

Fourth lesson – to continue, one may need to redefine how they dance.

BOTTOM LINE

Today we are sorting through tariffs, erratic government leadership, uncertain and climbing cost of war, demand for housing…shall I go on? We seem close to sorting it all out, when something new takes center stage, often something none of the “experts” anticipated.

What is one to do?

MEET. Remember what drives the dance. People need someplace to meet others. The internet may trigger the “hook up,” but there is a need for space for the connection to occur! We tend to need places to buy “stuff” and places to live (though the definition of both changes with each generation).  

WORK. The hope that your rich relative is going to pass at a convenient time and leave you money beyond your dreams, or you are going to hit big on the lottery, does not provide the most dependable plan for the money needed to drive your success. Seems like work, maybe in the cards!

DANCE. There are no prizes for sitting on the side lines. Follow the approach of children; find a way into the circle, and dance with all the joy in your heart. I’ll be there with you!