Old Skool: Six Stages To A Hot Market

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Mortgage and Lending with San Diego VA Home Loans/858-777-9751

I wrote this about two years ago.  It won a couple of Carnivals: 

Carnival of Real Estate, hosted here on Active Rain

Carnival of Real Estate Investing, hosted by Agent Shopper

It was a lot of fun to write and a pretty good read (if I say so myself). While I've written informational blog posts, on Myspace, since 2004, I had just started to seriously blog on Active Rain, at this time in my life.  "Old-timers" in the Rain will remember this one but I thought some of the new folks might enjoy this light-hearted look at a boom town:

I talk a lot about trends in housing.  One of the ways to make money in any real estate market is to buy correctly.  How can you spot the next Aspen or Scottsdale?  Here are the six stages to watch:

1- If looking for the next hot ex-urb, look for a small town that is surrounded by natural beauty.  An old mining town in Southeastern Arizona, a former mill town on the river in Massachusetts, or an unnoticed beach town on the Gulf of Mexico.  This is the period where the real cowboys invest.  Their plan is to buy land and promote it. There is a bar and gas station in town.   There is no chamber of commerce.  Your friends will refer to the town as "bucolic".

2- Look for the artists and tradespeople.  If you see galleries and studios replacing tattoo parlors you have a good chance of making a killing in this market.  Artists like physical beauty and a sense of community. More importantly, budding artisans are VERY frugal with the dollar.  While I can't prove it with data, I just know these left-brained thinkers have a "sixth sense" about seeing the big picture.  The chamber of commerce is made up of the artists and the gas station owner, meeting at Joe's Tap Room once a month. Your friends will refer to the town as "funky" at this point.

3- Independent coffee houses and resale shops  follow the artists and it benefits everyone.  Customers need a place to eat and drink while shopping so these little businesses come in.  They take over the abandoned gas station and call their shops names like "The Shell House"  or "X-ed ON".  There is still room for upside here.  The Chamber of Commerce is hosted by the newly converted bed and breakfast in town and the mayor and police chief have joined. Your friends will call this village "quaint".

4- Starbucks comes in. They knockdown "X-ed ON" spend the money for a full environmental cleanup and relocate on the best corner in this village. Starbucks is pretty forward thinking in their site selection.  They'll take a risk on an edgy area before 7-11 and McDonalds.  This is probably a five year play at this point.  It is unlikely that you'll double your money but there is upside here.  The Chamber of Commerce meets at the Holiday Inn Express on the outskirts of town. Now, your friends will comment that this town is "charming".

5- The builders invade the area.  Little did you know that they were optioning dirt back in stage 3.  You start seeing signs and flags going up all over the place. McDonald's and  7-11's are sprouting up next to the large grocery store that was just built.  One of the art galleries gets written up in the New Yorker and the other five consider relocating.  The Chamber of Commerce is now meeting at the new housing tracts with names like "Copper Ridge" or "Miller's Crossing" and is made up of Realtors, loan officers, insurance agents, and a state senator.  Your friends are calling this area "growing" and considering a life there.

6- The buiders are now on the multi-family projects.  Target, Walmart, Home Depot and every other big box has moved into town and hosting the Chamber of Commerce meetings at their "Grand Openings".  The bed and breakfast got written up in Fromminger's, the art gallery is now an auction house next to the Tiffany's,  Joe's Tap Room is now called "Josef's Olde Taverne" and the guy who used to sell weed out of the back of his VW Camper 20 years ago is now mayor.  Your friends call this place "home"

This is when you sell.

Originally posted as The Six Stages of a Hot Market

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Rainmaker
753,321
Larry Brewer
Benchmark Realty LLc - Nashville, TN
Nashville Real Estate

Brian - If I had only listened when stage 6 showed up.

Feb 17, 2009 09:17 PM #1
Rainmaker
41,301
Michael Lee
Frog Realty - Tallahassee, FL

Nice post.  Thanks!

Feb 17, 2009 09:58 PM #2
Rainmaker
182,202
Janet Guilbault
RPM Mortgage, Alamo Home Office - Walnut Creek, CA
San Francisco Bay Area Direct Mortgage Lender

Brian: What a great classic post, and so refreshing to read. I can think of so many California places that grew exactly as you outlined here.

Thank you for posting. Inspired to invest somewhere. Oops, that was the intent, right? I guess the sign of a good writer is that the reader is persueded without even knowing it.

I am still hoping our paths will cross someday, since I continue to admire and respect you, and ALWAYS love what you write.

Feb 18, 2009 09:49 AM #3
Rainmaker
230,126
Debbie Summers
Charles Rutenberg Realty - Orlando, Florida - Lake Mary, FL
MoveToLakeMary.com or 407-758-1020

Brian - You've hit the nail on the head...  I've seen it happen here in Central Florida - Some folks used to live in the sticks, not anymore.

Feb 18, 2009 12:55 PM #4
Rainmaker
137,666
Vicki Lloyd
The Real Estate Professionals - Lake Forest, CA
(949)457-0281, Lake Forest and South Orange County

Hi Brian -

This is a great timeline.  My sister lives is a "Stage 1.5" town (they have a CofC, but not many artists yet.)  I'm going to send her a link to this post!

Vicki

 

Feb 22, 2009 01:36 PM #5
Rainmaker
306,034
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA
VA Home Loans/San Diego

Maybe we should talk about that town, Vicki?

Feb 22, 2009 03:12 PM #6
Anonymous
Linda Nunez

Hi Brian: I'm Vicki's sister. We do have a newly re-formed Chamber and we have a LOT of artists in the area. In fact, we are talking about opening a local artisan's shop to showcase all the creative talents in the area. I think we're closer to a "2" because we do refer to our community as 'funky'! We are in Southeast Arizona, in the Sulpher Springs Valley, surrounded by both the Dragoon Mountains and the Chiricahua mountain range. We sit at 4500 elevation so our weather is perfect year-round. Our community is built around an 18 hole golf course where you can still buy a golf lot for 50k or a new house on the golf course for 225k or less! We're an hour's drive (at 75mph with no traffic) from Tucson airport and therefore only a $49 direct flight from San Diego. Best of all, for long-range growth we have the 'golden ticket' - lots of water. Our valley sits on top of what we are told is an unlimited aquifer. Having most recently come from the Las Vegas area where individual water shares sold for 35k each, we believe that when the builders begin working again the availability of water will be one of the top requirements on their acquisitions list. The community has traditionally been a retirement community but we recently have seen an influx of younger people (mostly those who can no longer afford to live in California) because of affordable housing. I am not looking forward to a Starbucks moving in but because we have all the ingredients to take us to a "6", we know it is inevitable.

Linda

Feb 24, 2009 08:55 AM #7
Anonymous
Linda Nunez

Hey Brian: I forgot to mention another reason we're on our way to a "6" - One mile north of town a 448 acre private residential air park community received its' final plat approval a few months ago and has recently begun the grading for the runway.

Linda

Feb 24, 2009 10:13 AM #8
Rainmaker
306,034
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA
VA Home Loans/San Diego

We are in Southeast Arizona, in the Sulpher Springs Valley, surrounded by both the Dragoon Mountains and the Chiricahua mountain range

Didn't Robert Kiyosaki invest there, Linda?  I've hunted just West of there; it's pretty country.

One mile north of town a 448 acre private residential air park community received its' final plat approval a few months ago and has recently begun the grading for the runway.

Bingo.  Vineyards, too.

Do you have any pics, Linda?  If you send them to Vicki, I'll be sure to display them here

Feb 24, 2009 11:55 PM #9
Rainer
118,227
Ginger Moore
Wilkinson & Associates Realty - Gastonia, NC

Hi Brian, nice blog, thanks for sharing!

Aug 29, 2009 11:00 AM #10
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Rainmaker
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Brian Brady

VA Home Loans/San Diego
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