My hands were sweaty as I nervously darted my eyes around the craps table . I was the pariah because I was “betting on the don’t line“. This particular strategy can be extraordinarily frustrating when a table gets hot. It requires a bettor to double up his stake each time he is incorrect. It takes incredible faith in the mathematical probability of a negative result.
“Seven Out!” yelled the croupier.
Victory, while inevitable, doesn’t really feel that sweet. I risked $2500 to win five bucks. I proved my strategy to the reckless gamblers betting the other way. I yelped exuberantly, not for my intellectual superiority, but in relief that my bet, the family vacation money, hadn’t disappeared. While I was yelping, the players at my table were pocketing pink and black chips and cheering raucously. Confused, I learned that they were collecting chips every time those dice hit various numbers on the way to making ten straight points .
Now craps may seem like a poor analogy to the real estate market. It really isn’t. I know that craps, a loaded game of chance, always favors the house no matter what strategy you employ. Real estate is a loaded game of chance; the best thing about it is that it is loaded in the owner’s favor. The “MySpace Generation” and the immigrant population are entering the housing market in the next 10 years. The demographics are astoundingly favorable, especially for the sunbelt states.
I think all the bubbleheads and doom pundits should yelp. You were absolutely correct this year. 2006, perhaps part of 2007, will be the year (s) of the bubbleheads. Gloat! Wipe your brow with confidence in your marked intelligence. I commend you for your prowess. You had to be correct one of these years; you had mathematics on your side.
Take a look around. Your neighbor sold that rental property in
Anaheim and lost $30,000. So why, like the gamblers betting on the come
line, is he cheering ?. He is cheering because he still has rental
properties in Albuquerque, Salt Lake City, and Bakersfield.
Now that I’ve commended you, I must warn you of something. You really don’t want a 30% decline in housing prices because every financial asset you have will be devalued . If you’re stashing your cash in the local bank, it will be gone because the bank will collapse. The FDIC will not weather a bailout without significant tax increases. Stocks will sink and mortgage-backed securities will be worthless setting your well-diversified, employer-sponsored 401(k) account back to it’s 1984 value. Think of the big picture bubbleheads. Isn’t that a huge price to pay for bragging rights?
2007 should be the year you stop gloating and start asking the tough questions about how YOU can profit off the changing markets. It is far more courageous to ask those questions than to post argumentum ad hominum under a pseudonym (although I secretly enjoy the mindless banter). The real estate market, like a cold craps table, will quickly get hot.. History and demographics dictate that this table will have a lot of winners on it.
I hope you’ll get prepared for the big roll.
Happy New Year to All !