Reading the tea leaves of real estate. What's up for 2007?

By your real estate dude.

You may not have noticed this, but our national culture has become one in which “talking heads” and “experts” rule the day. Just about every “news” program on television spends the better part of the broadcast segment asking experts to give their opinion about whatever they think is going on. Newspaper and magazine articles often do the same. The “experts” forecast and analyze everything from the weather to the war and we read or watch their opinions with great interest allowing our moods and thoughts to be shaped along the way. I do it, and I know you do too. Look at you. You’re reading this column!

This past Monday (December 18th) was a field day for talking heads. It was the “Seventh Annual Residential Real Estate Conference” put on by the Burnham- Moores Center for Real Estate at USD. The gathering of developers, investment gurus, real estate prognosticators, mortgage lenders and economists was quite large with many of the “movers and shakers” present and accounted for. During the presentation, a group of PhDs and industry experts gave their predictions for the coming year. As an official “talking head”, I was invited to attend. Here is how it went.

A well known investment guru and two PhDs in economics made lengthy, complex and impressive presentations, followed by a panel including an economist, a major developer and the president of a major San Diego real estate firm. The first presenter’s message was upbeat and optimistic. In his opinion, the market is experiencing a normal correction, there never was a real estate bubble and all will be well going forward. As I followed along with his presentation I was feeling pretty good about the market and wrote in the margins “Don’t worry, life is good”.

Just about the time I was feeling great about the coming year, the second presenter took the stage. This PhD spent his allotted time depressing the life out of everyone in the room with dire predictions of a sagging market. My note in the margin read “The sky is falling”.

Then, at the very pit of the room’s despair, the third presenter bounced upon the stage with a grin. His twenty minute message left my margin note proudly stating “It’s a normal market; no big deal; life is good”. Just as I wrote this the lady seated next to me leaned over and whispered, “I’m not sure if all this is good or bad”.

To put the icing on the cake of our confusion, the panel took the stage. Not surprisingly, they could not seem to agree on much. During the question and answer period I asked how so many experts can possible read the same data and come up with so many differing forecasts. They’re only response was, “Welcome to economics”. My margin note read, “They haven’t got a clue”.

So, where does that leave you and me as we try to sneak a peek at the future of the real estate market? It leaves us with the only valuable thing coming out of Monday’s conference. It was both the simplest piece of information to gather and the last presented.

Almost at the conclusion of the conference, the host decided to close with a parlor trick. Each table had an electronic keypad to allow the audience to answer three simple questions about the coming market. It was a gimmick meant to compare the audience opinion with that of the “experts”. But then, the audience was full of experts. It took only five minutes. Each table voted and the votes were tallied and presented on the big screen. My margin note… “The opinion of the audience was overwhelmingly positive; it’s going to be a good year”.