The Pond and the Lily Pad – Opportunity Knocks in Boulder Real Estate

Colorado Real Estate
Opportunity Knocks

Part 1: The Pond and the Lily Pad
Suppose you live in a large apartment building overlooking a 1.5 acre (65,536 sq. ft.) pond owned by the city. The city gardener wants to improve the looks of the pond and to improve the fish habitat so he plants a 1 square foot patch of pond lily. Let’s assume that this is a very fast growing type of pond lily and that its area doubles every week. After the first week there are only two square feet of lily pads. Nothing really to notice. After 4 weeks there are 8 square feet of lily pads, still no one living in the apartment building would notice. After 8 weeks, the growth of lily pads is 256% but still even the most observant people would not recognize this as a trend. Only after 13 weeks when lily pads fill an eighth of the pond would the early trend spotters usually notice the difference in the landscape. Just two weeks after the early adopters see the lily pads growing the pond is half full. At this point, the media discovers the lily pad situation and reports the explosive growth. One week later the pond is full of lily pads. It took fifteen weeks of very slow deliberate growth to fill half of the pond and only one week to fill the other half. When would you notice the lily pads in the pond? Ask yourselves these questions: Are you too busy to look in the pond? Do you know enough about lily pads to understand what your looking for? Do you see the lily pads but don’t care until you hear about it in the news?

Part 2: Tech Bust
Did you or someone you know buy a tech stock at the height of the boom? It was hard not get swept up in the fantastic media stories highlighting the huge IPO’s, the instant millionaires and the next big thing. Everywhere you went people were talking about how much money they have made by buying the stock of a company you had never heard with no sales and no product. The popular sentiment was “can’t lose”, “get in quick”, “if I could only get in on more IPO’s”, “nowhere but up”, “we are in a different era”… Obviously, this did not last and the lesson I took away from that era was that once ‘everyone” is talking about something, it is too late. In order to profit you must be a forward thinker, not influenced by the media. If you wait for the media to catch on, the trend is almost past and it is too late. The question is whether you are a forward thinker or a follower.

Part 3: Opportunity
Do you ever look back and wish you had bought real estate when it was more affordable, or just before the market took off in the 90’s, or before the rates went up. Now is the time to make up for those past mistakes. Now is a great time to buy real estate! Have you ever heard the phrase “buy when everyone else is selling”? These are the times when the smart money will be buying real estate. The national media has locked in to the housing story and will not let go. Locally, our paper is printing national stories with local bylines. People seem frozen by the negative news, waiting it out on the sidelines.

The CU Business Research Division in their recent 2008 Colorado Economic Forecast noted that “…the situation in this state is fundamentally different” (than the rest of the country). We did not participate in the recent excessive appreciation fueled by speculation that many other areas of the country had over the past four years. Our area is well ahead of the recovery curve. In my opinion our cycle is already in the process of turning. The news is gloom and doom but if you realize that real estate is local you can start separating truth from fiction. It is my hope to bring you that truth about our local market in this newsletter and it is my further goal to get you to see that the pond is just beginning to fill up with lily pads.

As always, we value your loyalty and friendship and I value your loyalty and friendship and am always available to answer any of your real estate questions. Neil Kearney 303-413-6624