The State of the Markets – 8/4/10
This post first appeared in the June edition of: Cirios Trends: In Search of Real Estate Opportunities
Humans, as a species, are lousy fortunetellers.
A few intrepid visionaries aside, most people simply cannot grasp what the world will look like in 20, 10 or even five years.
And for good reason. Trying to envision the future doesn’t mean picking some individual aspect of society and dreaming up “how cool would it be if …” Proper forecasting requires taking into account all aspects of human interaction, projecting advances in each area out into the future, envisioning a world with those new, unknown rules, then deriving a hypothesis within that framework.
Investing – whether it be real estate or stocks – requires just that predictive aptitude in order to make truly good decisions. The ability to look forward and predict what things may be like based on a set of projections is what separates great investors from those who are content with “market” returns.
In real estate, effective forecasting is impossible without examining and understanding demographic shifts. Populations move slowly, but with great inertia. Trends develop over time, based on fundamental factors that develop over decades, not years or months.
Ask any successful real estate investor and they will tell you that getting in front of demographic movements is the best way to build real estate wealth. Time horizons may vary wildly, whether one is spotting hipster migration within a city that typically foretells more affluent gentrification; or entire towns that over 60 years transformed into an almost exclusively upper middle class Asian-American community.
But how can you know, before, and buy accordingly? And here we are back to the human inability to predict the future.
This month’s Cirios Trends is devoted to one of the most controversial, yet potentially important development projects in the Bay Area, and how its relative success or failure could accelerate a demographic sea change in San Francisco that is already underway.
The Hunters Point/Bayview neighborhood is best known for being the most dangerous part of San Francisco. Gang violence is common, the streets are far from safe and, as one might expect, home prices are lower here than anywhere else in the city.
But Hunters Point also includes the largest untouched piece of land within the San Francisco city limits. Mired in environmental, social and political controversy for decades, plans to redevelop Hunters Point are edging closer to reality. Coupled with ongoing socioeconomic changes in San Francisco, the project is part of a potentially massive shift in demographic orientation within the city.
In the following pages, we barely scratch the surface of what the successful redevelopment of this area could mean for the city. In order to truly grasp the potential opportunities, sit back, close your eyes and imagine a world that is, in a word, unimaginable. (Click here to read the next story)
Tags: 94040 home price trends, 94040 price per square foot, 94303 home price tremds, 94303 price per square foot, 94506 home price trends, 94506 property values, 94801 home price trends, 94801 property values, bayview property values, bayview real estate, danville price per square foot, east palo alto home price trends, east palo alto home prices, east palo alto property values, hunters point, hunters point lennar redevelopment, hunters point property values, hunters point real estate, hunters point redevelopment, lennar hunters point real estate development, mountain view home price trends, mountain view price per square foot, richmond home price trends, richmond property values, san francisco demographics, san francisco real estate development