One Way to Look at the Future of Fenwick Island, DE Real Estate
With U.S. home prices at record levels, it’s reasonable to speculate about the future of Fenwick Island, DE real estate—particularly whether it’s such a good idea to buy right now. Most everyone recalls the last time real estate prices set records—and the drop-off that followed.
Once the U.S. market hit bottom, even though history teaches that it was an ideal time to buy, most regular consumers didn’t even want to think about anything connected with real estate. That, of course, was when the big corporate players (aka, the ‘smart money’) moved in to buy up distressed residential properties by the thousands. It’s a familiar story.
The future of Fenwick Island, DE real estate prices is always a mystery, but lately there have been more than a few signs that should quiet some nerves. Some of the ‘smart money’ seems to be ‘talking’…
Smart money moves. For those who track the largest corporate players—the ones with access to the best information and expertise—the signs are clear. Last Tuesday, the Blackstone Group agreed to buy HPA, a hefty enterprise that owns and rents 17,000 single-family residences. Blackstone had quit that market in 2019—but just two years later tiptoed back in with a $240 million investment. Last week’s decision “shows that the investment firm is turning even more bullish on U.S. housing,” according to the Wall Street Journal. That’s an understatement: Blackstone’s HPA acquisition cost $6 billion!
Join the Club. An expanding roster of Wall Street powerhouses has duplicated Blackstone’s decision. Reuters cited one key motivating factor: “continued demand for bigger homes from people working remotely….”
Long-term, why worry? Perhaps the most supportive fact is the one that’s been true for millennia: real estate has perennially been regarded as the epitome of substantial long-term investments. For homebuyers who have no intention of selling in the near- or middle-term (or ever), the ups and downs of transitory valuations can be simply ignored. For the majority of homeowners who continued blissfully untouched by the century’s first two tumultuous decades, their investment has again proved safe and sound. And should they eventually choose to sell at a profit, the tax benefits are unparalleled.
- Written by Jimmie Bachand
Is Ocean View, DE Inflation Really 5%? Yes (and No)
The latest Consumer Price Index registered a 12-month rise of just 5.0%. For many Ocean View, DE homeowners, that percentage is hard to square with the prices that keep ringing up at local gas stations. Five percent inflation doesn’t seem to match what’s been happening to a dollar’s purchasing power.
But actually, the CPI number isn’t deliberately deceptive.
True, Ocean View, DE residents have experienced a leap in fuel prices—and all of a sudden, many have found themselves double-checking their grocery store register receipts. Since the Bureau of Labor Statistic’s own breakdown of price inflation shows Gasoline at a teeth-grinding 56.2%, family drivers whose Memorial Day and/or Independence Day weekend outings involved multiple fill-ups were especially skeptical. Ditto if their holiday weekends involved the acquisition of Sporting Goods, which posted a 9% increase. If the weekend included an urban getaway, the Public Transportation increase (+15%) could even have prompted an unanticipated ATM visit.
The way that the “all-in” inflation number is calculated is dictated by what the Bureau’s CPI is intended to measure. The Index measures “consumption items”—the things a family consumes (that is, that it uses up). So how do housing increases weigh in? That’s a little tricky (it’s the Shelter component).
When a consumer buys a house, the amount spent doesn’t get ‘used up’ by living in it. In fact, as a capital good, the purchase amount stands a good chance of growing in value. So the investment portion of owned housing can’t be part of the CPI. To include the nearly 24% rise in last year’s existing home sale prices would wildly distort the CPI, rendering it nearly valueless.
But for renters, since the cash spent on their rent payment IS consumed entirely—their Shelter component is a significant part of the CPI—and May’s year-over-year figure registered a rise of 2.2%. For homeowners, an estimate of the amount their owned house might rent for (its rental equivalence) is included in their Shelter component.
- Written by Jimmie Bachand
Virtual Real Estate: Curiouser and Curiouser…
Down through the ages, land ownership has been synonymous with permanence, stability, and substance. Buying a piece of property also carried a measure of “belonging” since owners are automatically deemed to be members of the community (their tax bills prove that)!
The feeling of substantiality that goes with owning a parcel of Rehoboth Beach, DE land is part of its appeal—hence, the real that is part of our expression for land and buildings: “real estate.”
Land ownership is about as real as anything can get, all right—except that now, that may be another thing that’s changing.
The exception that has emerged is a kind of real estate that’s the opposite of real.
The New York Times recently explored the phenomenon in an article titled “The Curious World of NFT Real Estate and Design.” To appreciate what could be called “unreal real estate,” just realize that in 2021, one company—Superworld—has sold thousands of virtual properties, racking up average sales of around $2,000 each.
Superworld’s not-so-real estate offerings consist of 64 billion equal-sized plots that correspond to the surface of the actual Earth. Virtual visitors to its augmented reality globe can use their computer screens to roam the planet to visit and buy these “properties.” The Times reports that the first buyer to claim it could own “virtual land encompassing the Eiffel Tower…or prime commercial property in Lower Manhattan.”
On the Superworld site, users “can buy and sell virtual real estate on the platform.” For the price-conscious, Superworld globe-trotters will find that prices are, at this early juncture, available at bargain prices—at least compared with corresponding parcels on the real Earth,
If this all seems completely unreal, there are real-world examples that demonstrate the opposite. You can investigate the “metaverse” and the world of “NFTs” (NonFungible Tokens) to find examples. This year, for instance, virtual artwork by Beeple (Mike Winkelman) sold for $3.5 million at an online auction held by Christie’s. With plots of unowned property in SuperWorld “listed” at 0.1 ETH (one-tenth of an Etherium bitcoin, currently worth about $170), the fact “that it doesn’t really exist” (the Times’ description) doesn’t seem to faze some buyers.
- Written by Jimmie Bachand