3 Things Investors Should Ask Economists About The USA Property Revival

USA Property Market  As property investors we are often challenged to think about a piece of news we hear and it might even affect our decision to invest. It could be down at the local pub, at the golf course or as a result of something we listened to on the news. The latest challenge to investors in US property comes from three very important economists.

Robert Shiller and his fellow economists Karl Case and Anne Thompson published a paper this month saying there are no ‘unambiguous’ signs of a strong recovery in the market even though their own Case Shiller index says otherwise.

Sometimes however a piece of news can be useful while at other times it may not be and end up leading us down the wrong path in life. Thousands of years ago an ancient Greek philosopher called Socrates came up with a way to find out if what he was being told was worth listening to or if it would cloud his judgement. He called it the triple filter test.

With this in mind, let me tell you the story of when Mr Economist met Mr Investor…

Mr Economist was very keen to tell Mr Investor (who was looking at investing in Florida property at the time) some news.  It wasn’t good.

He had gathered all the opinions he could find before presenting it to Mr Investor and saying, “Hey you won’t believe what I just heard about the U.S. housing market”,

Mr Investor replied, “Wait a moment my friend, if I listen to what you have to say, are you absolutely sure that what you are about to tell me is true?”

Mr Investor had applied the first filter – truth.

Mr Economist hesitated, “Well no, I just heard about it and I have this theory”

To which Mr investor replied, “So you don’t really know if it is true or not?”

Mr Investor then added a second filter – goodness and asked, “Is what you are about to tell me about the US property market something good?”

Mr Economist responded, “No, well… I’m not sure it’s a bit ambiguous…”

Mr Investor questioned his friend further, “So you want to tell me something bad about investing in US property, but you think it is ambiguous and you’re not certain it’s true?

Finally Mr Investor applied a third filter, usefulness, and asked Mr Economist, “Is what you are about to tell me going to be useful?”

“Possibly, but it isn’t based on real numbers, just some opinions I have gathered. You see I have this theory …”

Mr Investor thought for a moment and then replied, “So if what you want to tell me about investing in US property is neither true, nor good, nor even useful, why tell it to me at all?”

Fortunately Mr Investor was right not to listen to Mr Economist on this occasion.

He knew all about the USA property market and the investment opportunities in Florida in particular. He had already received news that median sales prices in Florida in July increased 7.8 percent to $148,000 for single-family homes and 10.9 percent to $102,000 for condominiums.

He was also confident that he could still find properties that were 70% below even 2008 prices and enjoy rental yields of between 6-8%. Meanwhile, Mr Economist decided to tell all the other investors the bad news and allow Mr Investor to invest and profit while many other investors remained fearful.

Do you think the US Property revival will continue? Please leave your comments below:

Kind regards
Brett Tudor

Property Expert

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Categories: Florida Property / Property Invest


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