Real Estate Expo

I spent this past weekend at the Real Estate Expo. Over 61,000 attended, which made getting into seminars difficult. The line for Millionaire Tax Secrets wraped down the hall, from South Hall to North Hall. I never could get into that seminar. People were waiting in line for over an hour.

Got a few good tips on negotiating contracts and investment strategies for my financially challenged clients. Sitting through some of these workshops was like watching an infomercial live on stage. I watched some cheesy presentations from salesman touting their self improvement or get quick rich packages to the masses. They should be paying me to watch this. The highlight was Robert Kiyosaki and Donald Trump, both class acts. The expo will be back this summer for those of you who missed it.

Interest rates up
Fed hiked up interest rates another quarter point and signaled it may not be done yet. Bad for real estate? Of course it is, but one thing both Robert and the Donald said was some of their best deals were in bad markets. Trump said he picked up his property on Wall St for a million bucks during a bad market. Today it's worth much more than a million bucks. All markets are cyclical. Buy when there is blood in the streets...

No Housing Bubble

Last week, St Louis Fed Reserve President William Pool said at the Regional Chamber and Growth Association that, "My hunch... is that housing activity will stablize and remain at a high level this year." He also said, "Indeed, given that bubbles always burst... clear advance evidence of a bubble can never exist. If the evidence was clear, then everyone would know about the bubble and forthcoming burst, but then the buying that created the bubble would never occur in the first place." He then offered these words of comfort to those of us who own potentially overprice real estate, "So if you have an academic interest in house prices, I recommend that you wait a few years. If you have a direct financial interest, I can't help much, you're on your own".

Spoken like a true economist.

He believes that there is no national housing bubble, rather regions that may be overvalued. Real estate is all local. Californians should be a little nervous.

Hedging Price Risk
Want to play the downside in housing prices? The CBOE Futures Exchange announced they are launching futures contracts based upon median prices in the NAR existing-home sales data. This should spawn a new era in derivatives contracts. Just think, you can now write covered calls on your house. I wonder what the delivery on that would be like.

Cost Overrun

When I first inquired about the Royal SF last summer the former office building now converted into condos was due to be completed by November 2005. I called again in January and learned the completion date had been moved to March. To date it's still not finished and Bryan, one of their agents, stated the new completion date is in April. Four month behind schedule is not too bad for a project this size, but I wonder what the numbers will look like. According to the sales agent, it's around 70% sold.

Two new buildings in South Beach/SOMA are getting some attention. The SF Watermark is the latest addition to the South Beach skyline and, according to one realtor, is about 50% sold. The other is the St Regis and rumor has it the Gores have bought a posh new space there. Prices for these new luxury penthouses are as sky high as the development itself.