Wall Street’s Lost Decade

A Decade of Negative Returns

Last week, the S&P 500 Index made news by hitting a 4 year high. While Wall Street shamelessly hyped this grand achievement, here is the reality: At a time when tens of millions of Americans are nearing retirement, their portfolios have seen no real gains in the last four years. $10,000 invested in an S&P Index fund in 2008 is still worth $10,000. When you factor in the effect of inflation, investors have actually lost money over a four year period.

Piggybank_iStock

Taking a longer view of Wall Street’s performance, the data only looks worse. The S&P 500 in 2012 is trading at the same levels as it did in 1999. In effect, a 13 year investment has provided zero return(and in reality, negative returns once management fees and inflation are factored in) for the hundreds of millions of Americans who use Wall Street to steward their retirement funds.

For years, investors have been told that mutual funds are the safest and surest way to save for retirement. Yet, 5 out of 6 mutual funds have performed worse than the market itself, meaning most investors would be happy to have a portfolio that showed flat growth over the last 13 years.
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Investor Intelligence – The Housing Market Paradox

March 5th, 2012

Welcome to the latest edition of Investor Intelligence.buyingconditions

This week, we look at the latest reports from the housing market, changing attittudes about renting vs. buying, and a broad look at the multifamily market.

Your feedback is important. If there are any topics you would like us to cover please let us know.

Thank you for being part of the 37th Parallel family.

Kieran J. Donohue

Director, Communication and Education
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The paradox holding back the economy  Housing has not been this affordable in more than a decade, and interest rates are at historic lows. Yet, strict lending rules and a negative perception about home ownership are keeping the housing market in the doldrums.

Renting replaces owning as a wealth-building strategy  Given the article above, it is no surprise that attitude about renting is shifting, as more Americans see renting as a smarter move than home-ownership in order to build wealth.

Multifamily seeing strong performance across the board. Several “lesser known” markets are enjoying strong performance.  Plus we see continued reinforcement of Austin and Houston – two of our favorite markets. 

New Kids on the Block

The Other Side of the Coin

If we had a nickel for every article written about the Baby Boomer generation, we would most likely be living in the Caribbean sipping umbrella drinks and thinking about an afternoon nap. The ubiquitous Boomers have influenced modern America like no other generation and continue to do so as they move into retirement. As we have noted before, Baby Boomers will have a significant impact on apartment investing as they are now moving into a stage of life when they are more likely to become renters and remain that way for the rest of their lives.

But for apartment investors looking to capitalize on demographic trends, the Baby Boomers are only half the story.

Is there an Echo in here?

There is a second generation of Americans not as frequently mentioned but just as impactful on the future of housing in America, specifically in the apartment sector. The mainstream media might not be talking about them as much as their older counterparts (yet), but apartment investors should pay heed to this new generation. They are called Echo Boomers and they are just now entering the housing market. Industry experts predict that 15 million Echo Boomers will enter the prime “renter age” of 18-34 this decade.

The Echo Boomers are coming and they are going to be staying for a while.
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Texas Triangle Presents a Historic Opportunity

Not All Lists are Created Equal

If you want to be successful apartment investor, selecting the right market is one of the most crucial decisions you will make as you manage your portfolio.

Each year, we see just about every major publication release it’s version of the 10 best cities for.. .(fill in the blank) and then watch as inexperienced real estate investors flock to these areas in search of the next great opportunity.

Truth be told, these lists drive us crazy.

Frequently, the methodology used for these splashy rankings is never disclosed, or worse, uses metrics that are worthless to the careful apartment investor.
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Investor Profile: Mary Anne Magnaghi

Honest and Trustworthy

I met Ed Barriskill in the late 1990s when a friend was selling her condo, and we have had an excellent working relationship since that time–both in the residential and commercial real estate markets.

When we met, Ed had an outstanding record in real estate. But more importantly, I found Ed to be an honest, trustworthy man of great character.

Privilege to Work With

My daughter purchased that condo and then a few years later moved to Arizona. When selling her condo, I had the privilege of working directly with Ed after my daughter went out of state. He made excellent suggestions for maximizing the selling price and she received a very good return on her investment. In 2000, my daughter and her husband wanted to buy their first home in Arizona and wanted a trustworthy agent to help them through the buying process. I placed a call to Ed and he immediately interviewed several Realtors to make sure the agent realized their price point, what they were looking for, and their desire to locate in a safe area. The Realtor was very conscientious and worked closely with them throughout the buying process. When my daughter and her husband transferred back to California, Ed put them in touch with a Realtor friend of his who assisted them in purchasing their next home. In 2006, as executor of two estates with two homes to sell, I again called Ed. As my Realtor, he linked me with people to make the homes more attractive to sellers at a time when the market was turning downward. Ed’s hard work paid off and both homes sold relatively quickly in a market where other homes sat for months with no offers.
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