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The Real Estate Philosopher


Big V Redux – Was I Right?

Nov 9, 2020

At the worst part of the COVID pandemic panic, I said that the US would not only recover but experience a Big V Recovery, which was a phrase I coined.  
 
I made this prediction not once but multiple times in multiple articles and podcasts as well.

My first article, from April 2020, "Why This Will be a "Big V Recovery"
My second article, from June 2020, "Big V Recovery" - Nine Predictions for the Real Estate Industry"
I spoke on CrowdStreet's StreetBeats Podcast in October 2020, CRE Update

And although I admit I got nervous here and there that I would end up with egg on my face, I never swerved from this view.
 
My belief was that in a general sense, a country like ours with its entrepreneurial spirit and Democratic form of government would do what it always does when things go wrong and allow the “creative destruction” of capitalism to cause the rebirth of new businesses as quickly as other businesses died off.  And that has surely happened – I loved this article, by way of example: Is It Insane to Start a Business During Coronavirus? Millions of Americans Don’t Think So.
 
At the time I made my Big V predictions, I promised I would not be like the other prognosticators who triumphantly brag when they are right and tiptoe quietly away when their predictions are wrong and hope people won’t remember.  I didn’t want to be one of those people. 
 
I was going to write this article in early October (after the third quarter was over) but realized my conclusions could be thought to be political in nature, and I have sought to not be political in my role as Real Estate Philosopher; accordingly, I determined to wait until after the election to write this article. 
 
So was I right?
 
I think I was pretty solidly right, with some asterisks as follows:
 
First, in general, I saw consistent surprises virtually every month from just about every indicator where economists said that things were recovering faster and indeed a lot faster than expected.  I am going to refrain from making a long list of all the things I read in the newspapers.  It suffices to say that almost all the economic indicators are up a good amount or even dramatically.  For example, unemployment keeps dropping, consumer spending keeps rising, stock and other markets are rising, manufacturing is expanding, corporate profits are back up, all of the foregoing at a rapid pace.  And of course the economy expanded at a 33.1% pace last quarter. 
 
That is a pretty Big V as far as I am concerned!
 
However, there are two asterisks that I will mention….
 
First – some have called it a K instead of a V in order to take note of the fact that the recovery is dramatically better for those who have jobs that can be done remotely than for those who have to actually come into work physically, especially in big cities.  There is no doubt here that those parties have not experienced a Big V or even a V at this point.  Indeed, many of these people are suffering dramatically.
 
Second – real estate has some extremely rough spots.  These include hotels, retail, and offices in large cities, especially where public transportation or elevators are needed to get to work. 
 
These two areas have certainly not experienced a Big V recovery, which leads me to put an asterisk next to a fair assessment of my prediction. 
 
There are probably other places that are still being hurt that do not come easily to mind, and I apologize if I am inadvertently missing positive or negative spots.
 
I will leave everyone with this thought, which is quite subtle:
 
            DON’T LISTEN TO THE MEDIA
 
How many articles did you see about this ushering a new Great Depression, with those old black and white pictures of emaciated people waiting on bread lines?  How many times did the words “record drop” appear?  And what did you expect when you shut down the stores that shopping would fall off.  Good grief.
 
So, I urge you when you read the papers, to make up your own doggone mind.  Look at what you see and experience happening.  Be mindful that the media collects “bad news,” and tells you about it, and ignores good news.  And to make things worse, the authors of the stories often have a “spin” they are spinning. 
 
So when those who write articles say things like “people are concerned that……” make up your own mind if you personally are concerned or those you have contact with are concerned.  The media people have one goal, which is to get you to read their articles, and that is not necessarily a desire to accurately portray facts. 
 
When unemployment hits 10%, it means 9 out of 10 people have jobs.
 
When offices are 15% empty in NYC, it doesn’t mean NYC is dying; it means that people haven’t come back to work yet.
 
When hotels are closing down, it doesn’t mean hotels are obsolete; it means people are temporarily avoiding travel.
 
I could go on, but my point is made.
 
I wish everyone the greatest success and hope that whatever happens in Washington, the real estate industry continues to thrive. 
 
Bruce Stachenfeld aka The Real Estate Philosopher™

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As the Chairman of Duval & Stachenfeld – a law firm in mid-town NYC known as The Pure Play in Real Estate Law – I am inviting you to join The Real Estate Philosopher™. This will consist of my thoughts and also thoughts of friends and colleagues.

It will not be published in any traditional media – it will go only to friends of our firm. The purpose here is very simple – to put forth thoughts in the real estate world that are different, provocative, and challenging of accepted wisdom. Hopefully, nothing said here will be mainstream thinking.

You may be wondering how I am qualified to write on these topics since I am “just” a lawyer. However, I have an unusual place in the real estate world. As the Chairman of The Pure Play in Real Estate Law (one of the largest real estate law practices in NYC), I interact with an incredible number of real estate players. This ranges from small real estate shops with nothing but a gleam in their eyes, to some of the largest real estate institutions in the world, and everything in between. This gives me a unique and global perspective and allows me to act as an amateur philosopher in the real estate world. This has always been my hobby and it is what I love doing.

Regards,

Bruce Stachenfeld
a.k.a The Real Estate Philosopher™

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