Date & Times
January 31, 2015 @ 8:00 am - 5:00 pm
VENUE:Riverside Convention Center
Riverside Conventin Center 3637 5th St Riverside, CA 92501 United States
2015: PROCEED WITH CAUTION
Bruce Norris shares his latest prediction in this all-day seminar to help our network look forward to whats ahead in 2015 and beyond? Time to sell? Are we in a bubble? What’s Bruce doing in 2015? Attend live to find out.
Attention appraisers: “2015: Proceed With Caution” is approved for 7 hours of contiuing education credit by the BREA. After regsitering, please contact Aaron Norris for requirements.
FROM THE DESK OF BRUCE NORRIS: WHY I’M CONTEMPLATING SELLING SOME CALIFORNIA RENTALS.
In September 2005, I wrote a report called the >California Crash. I followed that report with the Category 5 report, laying out the reasons why the downturn would be extreme.
What was different from the Crash of 2007-2009 and the downturn 1990-1996? Why was the severity so different?
In the appraisal world, there’s a definition of market value. It goes as follows:
“The most probable price which a property should bring a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated: (2) both parties are well informed advised, and each acting in what he considers his own best interest: (3) a reasonable time is allowed for exposure in the open market: (4) payment is made in terms of cash in U. S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions* by anyone associated with the sale.”
The most important part of that definition is, “The price is not affected by undue stimulus.” What is meant by that is clarified in the last sentence, “unaffected by special or creative financing or sales concessions by anyone associated with the sale.”
The “undue stimulus” they are referring to is what I’ll call “transactional stimulus.” Transactional stimulus could include a seller carry back second, paying points, providing gift funds for the down-payment, etc.
What is not considered in the definition of undue stimulus is undue “systemic stimulus.” In Moreno Valley, in 2007, nearly every house was worth more than $300,000. In the 90s, I bought tons of them for $35,000. What happened?
In 2007, the lenders had created undue “systemic stimulus.” Anyone breathing could buy a home with no assets, no down payment, and no proof of income. The appraiser was able to easily find the 3-6 required comps to accurately complete their appraisal. No transactional stimulus was evident, and the transaction closed.
In 2010, those homes weren’t worth $300,000 anymore. I bought them during this down cycle for about $70,000. Since the bottom, the prices have moved up nicely to about $225,000.
Here’s the million dollar question…is it time to exit?
Under normal circumstances, looking at the charts I believe have predicted pretty accurately for what’s next for California, I would have said no way!
WE AREN’T UNDER NORMAL CIRCUMSTANCES!
The flip side to “Undue Stimulus” is “Reverse Stimulus.” Reverse stimulus can come in many forms. The key to looking forward from here is to accurately predict the type and degree of stimulus moving forward. Will it be reverse stimulus or undue stimulus for a wide variety of important categories?
The new report is named 2015: Proceed with Caution!
What’s next for real estate will be up to a wide variety of decision makers.
- Will budget concerns take a bite out of the benefits we know, love and enjoy by owning real estate? These could include interest deductibility, Proposition13, etc. Is 2015 likely to see undue stimulus or reverse stimulus in this category?
- Will lending policies loosen up or remain restrictive? And just because lending policies might get less restrictive 2015, we must also consider an historic perspective. Are the lending polices likely to be an undue stimulus or reverse stimulus?
- Will the volume of sales in 2015 and beyond go up significantly from the levels of 2014? It’s easy to get faked out these days looking at what a chart is telling you.
- An even better question than the volume of sales is who is the buyer and will they continue to buy? Hedge fund investors and foreign investors have been pretty big influences in the past few years. Will that reverse and cause issues?
- What about affordability? In the past, when California approached 17%, I believed prices were done increasing. Then, in 2006, affordability went from 17% to 11%. I was extremely surprised! What had changed to make such a low affordability number possible? The answer was the “undue stimulus” from the lending policies from 2001-2007. Here’s one of the most important questions this report will answer…
Is it possible that just like “undue stimulus” forced prices to extreme highs could “reverse stimulus” in a combination of categories prevent us from reaching that 17% affordability this time?
In other words, are we done going up in prices for this cycle? The conclusions I make researching this report will tell me if it’s the right time for me to sell some of my inventory.
In timing a market, the benefits of getting in near a bottom pales in comparison to the benefits of getting out near a peak. If you miss a bottom, it can still be hugely profitable. If you miss getting out, it can be devastating.
There are three types of investors. There’s the Mike Cantu type who has spent decades building a portfolio of well located, carefully selected rentals. Mike doesn’t want to exit at a peak. He wants to hold forever.
There’s a second type of investor who doesn’t know why things happen. They are influenced by market momentum and they get hammered when things change.
There’s a third type of investor who buys rental properties for them to go up in value. They may keep some well-located inventory and take the ride down willingly on some properties, but the majority of their properties will be cashed in as near the peak as they dare risk.
I think we have an early peak ahead of us. I’ll tell you just how close we are in January. This report is real important…please don’t miss it!
P.S. by necessity, this report deals with a lot of new topics and combination of topics I’ve never contemplated before.
WHAT IS INCLUDED
Continental breakfast, snack, lunch, full color binder (around 250 pages with over 400 charts), access to resources for this course on our all new web portal which will include the audio from the event.
WHAT TO EXPECT AND WHO ATTENDS
All our marketing timing reports focus strictly on the “When To” part of the real estate business. If you’re interested in “How To” start in real estate investing, please see our TNG VIP Subscription or keep your eye out for upcoming Distressed Property Boot Camps.
Our sell-out crowds consist of a mix of investors, Realtors, builders, mortgage professionals and related real estate fields interested in the data which will help them make better business decisions. We’ll give you our best shot at projections and provide you with all the important data we’ve been researching so you can develop your own conclusions.
- Continental breakfast, lunch, & snacks.
- Free parking
- Access to extra content, digital audio recordings on our portal from the event
- Full-color manual
2015:Proceed With Caution
$697 per person
2015:Proceed With Caution + TNG Premium Subscription
$747 per person (Save $300 with combo)