Not that I am really sure just what that means, except that it is the opposite of misplaced optimism. I bring
it up because I was “accused” last week of having “misplaced optimism” with regard to the real estate market. So, with my usual introspective take on the really silly things people say, I started to think about “misplaced optimism”. Just exactly what could that be? When could optimism ever be misplaced? Does “misplaced” mean that I should not express optimism? Or that optimism is in someway lost? Or If I, or the collective we, just do not want to recognize positive anything? And, if “optimism” is indeed lost, just where should I go searching for it?
Just so the average member of the home owning or wannabe home owner public is up to date, there is a large group of “optimistic” investors wandering around buying residential real estate. Lots of it. They are renting them out, covering the debt, and waiting patiently for the market to rebound. Grasping the fact that all markets move up and down is not a discussion of optimism, it is a discussion of and understanding of basic economics. It’s only been two years when the average American was buying real estate at a furious pace, using loan vehicles that transferred all the risk of borrowing to securities investors trying to get a bit more profit than made good sense. There was not even a hint that the market was at the peak. Just as few people recognize the peak of a market, if is also true that few people recognize the valley of that same market. And those securities investors forgot about the market also. If I owned stock in Merrill-Lynch, I would be furious today that a small group of greedy managers (who no doubt walked away with really big bucks) flushed both the company and my stock value.
In Denver, we are no longer in the valley’s creek. The Denver market has started slowly up toward the next peak. The operative word is “slowly”, because this time around it will take awhile for the the capital markets to re-establish themselves and create equalibrium in mortage loan origination’s. But, it will peak again in three years or ten. That is probably way to long for the average American, but long-view investors will get rich from Joe Citizens impatience.
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{ 5 comments… read them below or add one }
Carole Cohen 09.15.08 at 8:01 pm
geeze I forgot to answer the math question!
let’s just say we have reason to be optimistic and if we can’t be we may as well jump off a collective bridge as a country. I don’t think we are ready to do that! I listened in on a conference call tonight about the new Federal no money down rebirth of the Neimiah Program. They will be (at least initially) requiring a 680 credit score. So that means we have been willing to reflect on past mistakes, discuss the issues, and come up with a better solution, rather than sitting in the corner saying everything is awful.
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Steve Borgman 09.15.08 at 8:33 pm
Thanks for the placed optimism. I think it was Paul Gette who said that he made most of his wealth in down markets. I hope you and I are in good company along with him during this time!
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Larry McGee 09.16.08 at 7:17 pm
Carol,
Checked on the subsidy program you mentioned. The program exists, however, at this time, there are no investors that will buy the loans.
Larry McGee
Steve,
Thanks for reading and commenting. J. Paul Getty indeed made that comment. He noted that businessmen achieve success by finding opportunity in popular despair.
Larry McGee
Carole Cohen 09.16.08 at 7:36 pm
Larry you are correct; Congress is voting in committee this week and it’s expected to move forward there and then go to the House and Senate. It’s ‘expected’ that by Oct 1st it will be funded again. We’ll see! The conference call was about getting people on board to contact their represeentatives and encourage them to support it, although if you believe the Neimiah rep on the call, there is already good support as well.
I’ll keep you posted about it’s progress.
Carole Cohen 09.16.08 at 8:28 pm
you could be right, Larry, about their beginnings and history, this is the website: http://www.getdownpayment.com/ we’ll see if they can find investors; does it make a difference if Congress instates it as a program again? Maybe that changes investors minds. I don’t know.
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