Hunker down. Don’t get scared. Hold on.
That’s the advice of George Mantor, aka the “real estate professor” and host of “Keeping It Real” on KCEO 1000-AM, where for the past year he’s been dispensing his wisdom on how San Diegans can use real estate to rev up their bottom lines.
When he’s not busy with that, Mantor is minding his other info outlets, including free monthly consumer workshops, a 33-foot mobile real estate center and his Web site, www.myafg.com.
On this particular day, Mantor wanted to talk about bubbles and the big picture.
“I went through the previous bubble,” he recalled of the late 1980s-early 1990s real estate bust. “A lot of jobs were lost. You have to hunker down, don’t get scared and hold on. We might go through a temporary period like that, where demand abates substantially and there’s a temporary glut of inventory, but it will all be absorbed eventually.”
It’s all about ebbs and flows.
“We may be looking at the golden age of real estate,” said Mantor. “People are predicting the end is just around the corner, and, eventually, they will be right, and demand and supply will adjust. But I don’t see it will decline much.”
What really rankles Mantor is “failing to see the big picture.”
“The concept of a bubble is a complete misnomer,” he said. “It’s intended to scare.”
Instead, he said, consumers should be replacing fear with a focus on how to make the market work for them. And that doesn’t mean pulling up stakes and heading to the hinterlands.
“You want to own real estate to leverage someone else’s money,” said Mantor. “You shouldn’t plan to leave San Diego, but do what is necessary to hold real estate. The fault lies with the industry itself, our failure to inform consumers about the benefits.”
A real estate veteran of almost three decades, Mantor, 56, has watched his industry evolve from a time when there were very few options to the traditional down payment.
“Now, there is tailoring for the needs of the individual,” he said. “Across the country, homeownership rates have never been higher.”
Mantor said he’s aware of the special challenges of owning property in San Diego, with a population that is growing, while real estate is not, with a dwindling supply of developable land. And there is the glamour factor, too.
“There is no mystery why it costs more to live here than in Saskatchewan,” said Mantor. “The best and the brightest are going to want to come here. We have one of the most creative classes of individuals in San Diego than anywhere else in the country. It’s always going to be expensive here.”
You can’t be too young to start planning for that first nest. Mantor was only 20 when he jumped into the market.
“You need to know that credit scoring is a game everyone is forced to play, whether they want to or not,” he said. “You need to understand, as you go through life, plan ahead.”
So-called “creative financing” has been evolving over the years, giving hope to people who normally can’t plunk down a 20 percent or 30 percent down payment. While some of those options have drawn criticism as being too high risk, it all comes down to knowing what’s right for your own needs, and what is not.
“Reverse mortgages , people thought they were evil, but they’re not,” said Mantor. “There are different tools available to you over the course of your life.”
But, he said, whatever it takes, “People should stretch however far they have to in order to get in.”
If you think it’s tough buying one home in San Diego, get this: Mantor says you should own at least two.
“You have tax benefits and leverage opportunities,” he said. “Once you understand the tools, the opportunities become something that are exciting.”
And one more parting thought
“Owning real estate is as good as it gets,” said Mantor. “There is no better product. It is the only real thing there is. Everything else is on the way to the junkyard. If you put your money into anything, this is where you should put it.”
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Trends And Predictions:
The San Diego chapter of the National Association of Industrial and Office Properties, at a July 28 confab at the La Jolla Marriott, mused, pondered and made predictions about the state of the commercial real estate office, land and industrial sub-markets of mid-San Diego County.
This meeting of minds, held three times a year, produced the following tidbits:
– Markets such as Kearny Mesa and Mission Valley are experiencing an influx of activity.
“Mission Valley Class A office space is 17 percent vacant,” said Mark Wayne, senior vice president and principal of Burnham Real Estate Services. “But there is tremendous activity and lots of existing tenant expansion.”
– The markets that are attractive have seen a slight increase in lease rates, but the demand and supply have kept up pace, according to Eric Northbrook, senior director of Cushman & Wakefield.
“We have seen a 3 to 4 percent rent rise over the last two to three years,” he said. “Transaction times are the same as they were nine to 12 months ago. There is not a real sense of urgency, yet.”
– San Diego is not out of the woods, said David Marino, principal and executive vice president at the Irving Hughes Group.
“We are right in between a tenant and a landlords market,” he said. “2000 was not sustainable. Now, however, we are seeing consistent capital markets. If we have a drizzling of new capital into San Diego, office space will continue to fill.”
He added: “We are seeing the coming generation of storm. What happens as baby boomers retire? Pension funds will be affected, increasing the need for liquidity. Pension funds are under-funded now.”
– Lease rates at the end of this year will probably hold for the next three to four years, said Marino.
– San Diego may see a small exodus of certain kinds of companies, especially call centers, said Rick Sparks, the executive vice president of CB Richard Ellis and a specialist in employment land.
Many companies, especially ones that pay between $8 and $20 an hour, are getting priced out of the market, said Marino.
Added Sparks, “We are a breeding ground for small companies with intellectual capital. The business condominium market is red hot.”
– The need for smaller office space has risen, said Sparks.
“Industrial condos are doing well,” he said.
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Good Deed:
Members of the San Diego chapter of the Construction Financial Management Association, a nonprofit organization dedicated to promoting the professional development of construction financial managers, recently donated $10,000 to San Diego State University’s Construction Engineering and Management Program.
The program is designed to address the region’s shortage of qualified engineers with construction and project management skills.
Send residential and commercial real estate news to pbroderick@sdbj.com or via fax at (858) 571-3628.
