Real Estate Words of Wisdom
Ramona Real Estate by Paul Tarr
There has been a lot of Hub-bub in the local real estate market these days. They say human events are driven by two emotions: Fear, and Greed. So it goes in real estate. The challenge is that every property is unique. In uniform tract developments it is easier to adjust for the small variances in qualities to arrive at a value. Then, there are areas like Ramona. If it exists in San Diego County, it’s here in Ramona.
People seem to be frustrated by both Macro and Micro aspects of Real Estate in Ramona: Timing the Market, and Practical Ramona Real Estate.
Timing the Market. California real estate seems to be a roller coaster. Up, down, up, down! Most other states in the nation just do not behave this way. For that reason, every California home buyer is emotionally an 'investor'. There is that investment quality to Real Estate here, no doubt. If you are an investor, there are to type of ROI you are looking for. One is the Retrun of the Investment. Will you get your money back? And, perhaps, more? The other is Return on the Investment. What does it pay you every month? What's the dividend?
Return Of the Investment in California Real Estate is based on buy points in cycles. Clearly there are booms and busts. Of course it is always best to buy in the trough of a down turn, and sell at the peak of the cycle. However, it is impossible to time these points exactly. Even for the experts. But historically, close is good. Many people miss the buy points by ‘sweating the small stuff’. Gordon Zick once said to me “you know, it’s not enough to be in the right place at the right time. You have to do something.” Recognize your own resistance to act and take the appropriate steps so that when the time is right, you can pull the switch.
Return On the Investment is what it gives you back monthly, or weekly, or yearly. The dividend. I have always thought that much of the R On I in home ownership is HOW MUCH YOU LIKE IT! Would you like having your coffee on that balcony in the morning? Is the neighborhood good for your children? Does it have that romantic fireplace? Can you ride your horse off the property? It is hard to be objective when it comes to subjective feelings, and there are always trade-offs. My favorite saying is: ‘When you buy a house you get two things. Nobody likes the payment, so you gotta like the house’. It’s OK to get what you want. Listen to that little voice inside that says ‘I like it.’ Then act swiftly.
Now most astute buyers are wondering “if interest rates go up, won’t sales volume go down and prices fall?” Sales volume will fall, no doubt. However, if history is any teacher, prices will not fall significantly. Why is this? Well, the reason interest rates go up is that inflation has reared its ugly head. During times of inflation all prices increase. That’s what inflation is. The dollar buys less. Gas, loaves of bread, haircuts, and yes homes become more expensive. In 1980 when interest rates were 17% on home loans, sales volume of real estate fell through the floorboards. The interesting thing was that prices flat lined. They did not (generally) fall. Housing prices act like a commodity during times of inflation.
On another tack, the Government can help offset the negative effects of heavy debt by fostering policy that may lead to an inflative environment. If you borrow heavily and incur massive debt, inflation will allow you to pay off that debt with cheaper dollars. The purchasing power of each dollar becomes less. Just study Mexico in 1994 when they devalued the Peso. Ah ha! Was that before or after the loan we gave them?
Long story short, it is unlikely that Real Estate prices will become much lower from this point on. I believe we have seen the bottom of real prices. So, here we are in the long awaited trough of the cycle. Arguably the right place at the right time. Historically, at the bottom turning points of the cycle, fear runs high. Ironic that at the times when there is more profit to be made, fear is stronger than greed. Oh, the fragile human condition.
Practical Ramona Real Estate. Ramona is a unique market with many factors that ‘down the hill’ agents are just not familiar with. It is a big area. The Ramona planning area is 130 square miles. It is easy to get lost. We have septic systems that perform differently depending on age and soil types. Wells are a deep subject, and perform differently depending on rock strata, pump specifications, and the location. Agricultural zoning allows a variety of land use considerations. Animal designator codes define types and number of animals allowed. There are County Maintained roads, Private Road Maintenance Agreements, and Road Covenants. The Ramona Municipal Water District has jurisdiction over some areas but not others.
Many people are interested in Ramona because of specific desires, be it growing grapes, raising horses or camels, or running off road vehicles. A listing agent having this knowledge will simply be able to get a higher price for the seller, and have a better network for finding the right buyer looking for these specific attributes.
For a Buyer, knowing exactly where these things are allowed will be a huge advantage in the grand Ramona market. Now when you throw a distressed sale into the equation, where there are multiple offers, and the seller will not be disclosing anything, and the Buyer cannot ask for repairs, it is imperative that the agent have both feet on the ground locally. The agent must know what the right questions are, and know how to get answers to them quickly.
I am very fortunate to be a member of the Ramona Real Estate Association. Over 20 years I have sold real estate all over San Diego County. Ramona is challenging. This organization of Realtors is dedicated to improving the professionalism of our association through local continuing education and networking with each other for solutions to the challenges that our unique market presents us every day. I recommend that if you are considering buying or selling real estate in Ramona, find a member of the Ramona Real Estate Association to get the job done.
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Paul Tarr is the Broker for Ramona Real Estate Brokerage. He holds a Bachelor's Degree in Real Estate Investment from Cal State Long Beach. Paul has been a licensed real estate agent since 1988 and a broker since 1994. He is a long time member of the Ramona Real Estate Association, and has lived in Ramona since 1989. He has four kids in superior Ramona schools.
