Wednesday, February 14, 2018

Predicting the Real Estate Market

1. Basic Industrial Development; 2. Support Industries; 3. Residential Development; 4. Retail Development Economic Base Theory holds that basic industries and support industries are requisite for the population growth that spurs residential and retail development.
This post originally appeared on the Hermit Haus Redevelopment website on 2016-02-12.

When I wasn’t watching the rat race or helping prepare for the educational events at the Dallas conference this week, I was taking notes on what the speakers were saying. My biggest takeaway was to learn about economic base theory (EBT). Economist Robert Murray Haig first put forward the theory in 1928. It essentially says that jobs lead the economy both when it is getting stronger and when it is getting weaker. This is something that we all have intuited, but it was good to have this feeling stated overtly and have the underlying science behind it explained.

I won’t go into all that, but I do want to provide the sequence and define some of the terms used in the theory.

EBT holds that development happens in a specific order for specific reasons.

The Texas Medical Center in Houston In Houston, the Medical Center has become a basic industry, providing more hospital services than the local economy consumes. People come from around the world. Photo source: Wikipedia
1. Basic industrial development
A basic industry generates more of a “product” that is required by the local economy. The surplus is exported. Exporting creates more jobs than the local economy would otherwise support. Basic industries create jobs beyond what the local economy would generate without them.
The important thing to remember is that manufacturing is only one type of exportable industry. In Orlando, tourism is a basic industry. In Omaha, it’s insurance. Real estate is not a basic industry because it can’t be exported, but real estate education can be. For most of our history, agriculture was a basic industry.
2. Support industries
Support industries such as accounting and consulting move in once the basic industry grows to the point where it becomes able to outsource these functions more efficiently than it can perform them in-house. Support industries equate to even more job creation.
Churchill Square Apartments in Corpus Christi Industrial development brings in jobs at all pay grades. Some of the new people will demand single-family homes of various prices. Others will drive demand for multifamily development. If you’re going to invest in real estate, you must understand the basic industries that support the real estate market where you work.
3. Residential development
The basic and support industrial job growth create demand for additional housing once they have demonstrated that the jobs are there to stay (whatever that means). Workers like to live near where they work.
4. Retail development
As families move into the area to take advantage of the job growth, they need to buy things. Again, most consumers prefer not to travel very far to buy groceries or clothing.
In rural areas, the school district often is the largest employer. Education is like retail in that it depends on the strength of the local economy to survive. If the basic industry goes away, both retail and education will have to downsize and may eventually become completely unsupportable.
Finally, the advent of internet commerce slows down the demand for retail development and speeds up the deterioration of the retail market if a basic industry moves out without replacement. In fact, you may now see demand for retail space decrease even in a stable economy.

This model can help predict the direction a real estate market will move. It is not 100% predictive because the real estate market is imperfect in that everyone is working with incomplete information, each individual property—single family, multifamily, commercial, or industrial—is unique, and a single seller controls the availability of each property. Nevertheless, we all need to understand the direction our local economies, and therefore our local real estate markets, are moving.

 

Tuesday, February 06, 2018

Pre Event Report

Album Cover Illusions on a Double Dimple Photo source: Amazon
Ben, the two of us need look no more
We both found what we’ve been looking for

—Don Black

Weather or Not

I made it to Frisco after taking almost four hours for what should’ve been a 2.5 hour drive, according to The Googles. Waco was probably the most interesting part of the drive. I had to go through a thunderstorm that was like driving through a tropical storm. There were times I couldn’t see the car in front of me, even though the traffic on I-35. It slowed to almost 35 miles an hour.

By the time I made it to the north side of Waco, I had driven out of the rain. The roads were not dry, and the sky looked like it could start to pour again at any second. But it had still been free of the rain long enough for the automatic windshield wipers to stop for a couple of minutes. Then my phone went off in panic mode. “Warning! Warning! Warning! Severe thunderstorm warning for the next 18 minutes. Really helpful, Siri.”

So anyway I managed to get to the event and get checked in. My job tonight was to attach badge holders to the end of lanyards, and I did a few hundred of those. Then we broke for the evening and I went to the other hotel because I hadn’t been able to get booked at the Hilton tonight.

I got checked in at the other hotel, which shall remain nameless for reasons you shall see. I went up to the room and found it to be very very nice, if not worth the price that I’m having to pay for it. But that’s what happens when you go to a conference and have to get a hotel in a downtown area

Sleeping gray rats Rats have their place in nature and science. We don’t have to worry too much about them at the Hermits’ Rest Ranch because we have three dogs and numerous wild raptors who all love rats. Photo source: The Scientist

Ratatouille

By that time, I was hungry for dinner. I go downstairs to the restaurant, and it’s pretty nice and reasonably priced—for a hotel. The waitress was really personable and made me laugh. She took my order and went away. While I was waiting for my food to come out a fairly large gray rat scampers across the restaurant in front of me. I was tired, so I rub my eyes thinking, “Did I really just see a rat run across the restaurant?”

About the time I convinced myself that I didn’t see what I saw, the rat ran back across the other direction. So when the waitress came by with my drink and to take my order, I told her, “By the way you might want to tell your manager I just saw a rat run across there.” When she realized I was serious, she burst out laughing, “Oh no. Now I have to set traps for it.”

She then left to get my drink refill, and I heard the guys in the bar laughing all the way across the hotel. Mind you, it wasn’t really empty in the restaurant, just slow. Like you expect from a hotel restaurant on a Monday night.

She came back and told me that she told the guys in the bar, and they were having a good time about it. She also told me she poured my second drink so it would be comped. Then she left to check on my order and the rat made the third appearance. I told the waitress about this when she came back, and she told the manager who reiterated that she had to set traps for it now.

Everything was settling down when the waitress went to get my food. She came back and she’s laughing so hard she could hardly walk. She said the had made it to the kitchen and the three big burly guys in there were all up on the counter yelling that “there’s a bunch of them on the floor and there’s only one.” She says, “Frederico says, ‘He’s been here a long time. He is gray. He’s got lots of gray hair.’ I couldn’t convince him that they’re all gray.”

She and I talked for a long time about how she ended up here and things we have in common. Her husband is a national record producer, and they live in Junction. She came up here to open the hotel and his ended up staying for almost 7 years. I told her that I spent 10 years on a three month contract once. This was a very enjoyable and to what had been a stressful then boring day.

Find your hope and laughter where you can.

Because I was unable to write much this week, Suna adapted this post for republication on the Hermit Haus site on 2018-02-09.

 

Friday, February 02, 2018

Fortune Cookie Humor

A fortune cookie
If your friend wants to learn to drive, don’t stand in the way.

For the first time in a long, long time, I got a funny fortune cookie.


Sunday, January 28, 2018

Happy Birthday, Ralph

Elaine and Apache We did have another visitor yesterday. Elaine stopped by the ranch on her way from Austin to Houston. Photo by: Suna
Happy birthday to you. You live in a zoo.
You look like a monkey and smell like one, too.

—Childhood parody

Yesterday we celebrated Ralph’s 61st birthday, which actually occurs sometime around Tuesday. When it actually happens depends on how you look at it. Since he was born in Tasmania, he could celebrate more than 12 hours ahead of when he would here in the US, starting the day before. In fact, he says he has a 44 hour birthday.

As usual, he seems to of spent most of the day cooking in preparation for the party. He made what he calls a sweet and sour dish, but you can’t really tell. It didn’t taste like any sweet and sour I’ve ever had, but it was good. Also made curry dish which everyone that we would eat it said was good. While I find his crew dishes more edible than most, I avoid them when possible.

Sue Ann and Canova brought dessert, all of which got eaten.

Also in attendance were Duffy, one of his friends whose name I don’t remember, and Robert Palmer—not the singer; he’s dead, and we don’t really care for zombies showing up at our celebrations.

After dinner, Duffy regaled us with funny stories about the time he owned a rhesus monkey. We drink a lot of wine and went home.

 

Saturday, January 27, 2018

Brown Grass and No Water

Brown grass and a low pond. The view from the back porch shows the pond is starting to show the effects of a string of dry months.

It’s been spitting rain off-and-on for a couple of days now—never raining, never being dry. We’ve had fog almost all day today. We could actually use a little rain.

January has been really dry. We’ve only had about 1.3 inches, and that follows a fairly dry December. The average for January is just over three inches. I hope we’re not seeing the start of another drought.

As Dad would say, “We’ll see….”

 

Saturday, January 20, 2018

Truthiness and Laziness

Stormy Daniels Frankly, I don’t care whether or not Trump paid $130-thousand to keep Stormy Daniels from talking about their relationship. If she did, more power to her. Regardless, the story is a distraction from more impactful concerns. Photo Source: Pinterest
It’s easier to overcome a lack of information than misinformation or disinformation.

—CNN Pundit

Unfortunately, the claim of “Fake News” resonates on both the left and the right. Trump called CNN “The Clinton News Network” during in the election, falsely claiming that the network only carried negative stories about him. For decades, my more liberal friends have referred to Fox News as “Faux News.”

I’m not citing the two claims as equivalent. In a sample of one, I once got a Republican friend of mine to reluctantly agree when I called the Republican Party “the political arm of Fox News” because it certainly seemed that the network established the Republican talking points on a daily basis. At the same time a study found that people who scored worst on a questionnaire about current events listed Fox News as their primary news source while those who scored best said their primary news source was … Comedy Central.

On the other hand, CNN at least tries to rely on factual reporting. They don’t always succeed. And I don’t believe the Democratic Party is organized enough to be the political arm of anything.

Finally, this whole problem with confidence in the media derives from laziness.

When I was a child, Walter Cronkite was the voice of reason and truth. We believed him because he did his homework.

Today, the media seems much more focused on conflict than truth. Reporting is considered unbiased when they bring two talking heads together to argue without fact checking either side of the argument. Arguments are drama, the verbal equivalent of a bloody lead. Facts are boring.

Politicians are eager to exploit this laziness, which enables them to spout whatever truthiness their base wants to believe. This laziness, along with the ever increasing political siloization, brought us to the current government shutdown, at least partially because Senate leaders Mitch McConnell and Chuck Schumer “are not in the habit of talking to each other,” according to one Senate aide.

Call to Action

We need to hold our leaders accountable for the mess in Washington. That means notfollowing the party line of either major party. It means looking beyond the distraction of the 24-hour news cycle and the endless parade of forgettable pundits. It means doing the work of fact checking with reliable sources.

Here’s a hint: If you agree with most of what you hear on your primary news source, it’s probably not factually reliable. If it relies on attacking the character of its opponents, it’s definitely unreliable.

Truthiness is the enemy of democracy and the tool of authoritarianism.

Monday, January 15, 2018

Good Rhetoric

Truthiness defined “Truthiness” is only one of the forms of rhetorical misdirection you have to look out for as you follow what’s going on in Washington—assuming you have’t given up already. Image Source: Roger Pielke Jr.
Why would I lie when there are so many ways to tell the truth?
—Unknown

When I studied communication in college, I had to take a course called Rhetoric and Communication. There I learned a simple trick to understand the truth of what people say in political discourse. It is a simple adage, “Good rhetoric denies itself.” It means we are more likely to believe a persuasive argument if the speaker says he is not trying to persuade us or, as is more common in today’s propagandized sound bytes, states a blatant untruth that feels right. To use a term Stephen Colbert coined, this last bit is called “truthiness.”

Here are a few examples of good rhetoric denying itself. Forgive me if I use Shakes twice from the same speech. It’s just that the Forum Speech uses almost every rhetorical device known to man.

  • “I am no orator, as Brutus is, But, as you know me all, a plain blunt man....”
    Mark Antony disparages his own speaking ability to put the crowd at the forum at ease before delivering one of the most persuasive, eloquent orations in the English language.
  • “I have come here to bury Caesar, not to praise him.”
    Of course, Mark Antony goes on to paint Caesar in a light that would make Oprah seem vile by comparison.
  • “Reason, not rhetoric will win this campaign.”
    As Max Atkinson says, “So here he was using an alliterative contrast, one of the most important of all rhetorical techniques, to tell us that there wouldn’t be any rhetoric from the SDP.”
  • “I’m the least racist person you will ever interview.”
    Need I say more.

Tuesday, January 09, 2018

Feeling My Mortality, LOL

Sexy female reaper This isn’t really how I picture Charley Davidson, the sexy, funny Grimm Reaper in Darynda Jones’s soon-to-be 13-book series. In my mind, Charley carries a bit more weight. Nonetheless, I do feel the Reaper’s chilly breath on the back of my neck more that I used to. Photo by: California Costumes

Last year, I fell ill just after Thanksgiving. I was sicker than I remember being in years. Then I fell ill again on a return from a Christmas vacation in Ruidoso. All of this illness has me feeling my mortality, but since I am a big fan of Dad Jokes—and being a dad who is approaching his sixtieth birthday—a couple of them came to my mind during recovery. I can’t help it. I come from a long line of folks who tell jokes on their death beds.

The first of these jokes has to do with my eventual reaction to cold medicines. Over the years I have noticed a fairly standard progression as the disease works its way through my body and eventually out of it.

Q: What is the scariest thing about being sick?
A: Realizing you have to sneeze and the drugs you’re on give you the runs.

The second Dad Joke comes from a much more humiliating realization.

Q: What is the saddest thing about getting older?
A: Realizing that you now consider coffee a recreational drug.

That last one would make Charley Davidson, who once referred to coffee as “the nectar of the gods,” very sad.

Sunday, December 31, 2017

Coming Home

Icy roads seen through the car window. The roads sure were icy on the way home today. Photo by: Suna
And it sure been a cold, cold winter
And the wind ain’t been blowin’ from the south

—Keith Richards, Mick Jagger

The trip home from Ruidoso took longer than expected. Yesterday, we took the long way to Abilene, where we overnighted in the same hotel as on the trip up. Unfortunately, we ran into a serious cold front just after crossing into Texas.

The night turned the roads to a skating rink, so we waited until almost noon to leave the hotel. The low pressure light was on for the driver’s side steer tire, but we couldn’t do anything about it. All the air pumps we passed were plugged with ice, and I couldn’t get air into the tire until like the fifth one.

The roads were so bad the trip from Abilene to the ranch took six hours. We were being very careful, despite the car being much smarter about driving on ice than me.

Anita was sick for the return trip and slept through most of it.

 

Thursday, December 28, 2017

Ruidoso

I can go outside...sometimes. See! I did get out of the house at least once. Photo by: Suna Suna stands on a wall behind me. Suna sees life from my perspective by standing on a wall. Photo by: Anita
I and Anita in the trees. Suna wanted Anita and me to pose
together to show how tall the trees are.
I’m the tall one.
Photo by: Suna
It’s gettin’ kinda cold in Ruidoso [wishful thinking]
And Abilene ain’t gettin’ any closer

—Charlie Daniels

This has been a very good week for me, all things considered. Suna, Anita, and the boys have gone hiking and exploring a lot while I have stayed around the house like the hermit I am. Of course that means I worked some, too.

We were supposed to close two houses while I was away this week. That didn’t happen. Both closings have now moved into January, which will make the Hermit Haus books look really bad at year end.

The weather has been unseasonably warm. At least one day saw highs in the seventies, and even the nights have been temperate. The ski lodges are having to manufacture snow. One waitress in town huffed, “You’re from Texas. You’ve had snow this winter.” Down between Austin and San Antonio.