Why American Real Estate loves the Bachelorette

Who hasn't ever the dreaded words, "We need to talk?” You’re having dinner at a nondescript restaurant with bus boys bustling around, waiters taking orders, and then out of the blue you hear those dreaded words: "It's over, Tim.” Then two weeks later your old girlfriend is going out with the jackass nobody liked in high school. I've been watching a little more ABC lately, and that means I’m watching The Bachelorette. The darling of the show has fallen in love with the incorrigible asshole Bentley. Not only is he not the one for our lovable friend Ashley Hebert, it’s obvious he gets some sick kick out of seeing her cry. It seems like since he's left, all she does in every episode is go on dates and wax poetic about him.

The US Real Estate industry is in the same place. We got "done dirty" by loans with bad terms, very easy money, and imbecile regulators.As a result, we are mired in one of the worst real estate markets in decades. Now that we've been shocked back to reality, Congress is trying to put together sensible rules to keep us on the straight and narrow.

The largest hangup for the industry is the Qualified Residential Mortgages (QRM) rules. The QRM guidelines seem like the astute, conservative way to prevent further housing disaster. You know, kind of the safe "ivy league boyfriend." But, true to form, Ashley/people are clamoring for Bentley – the “bad guy,” the exciting, less restrictive mortgage options.


The worst thing is that there are tons of groups that want to get behind this move to lower the QRM standards. Legislators, the National Association of Realtors (NAR), the National Association of Home Builders (NAHB), and NA whatever else you want – just about anybody else who is about to have a big old bite taken out of their pie.

The harsh reality is that in the long run, the conservative Ivy League boyfriend is going to have to be hardworking, but will also ultimately enjoy prosperity.Going with the bad boy Bentley and all his easy lending ways seems to be a one way ticket to all of us living in a trailer with our parents.There are a lot of people with a lot invested in how these QRM rules take shape. The last time those with the most to gain ran amok on a sugar high, the rest of us were left to clean up the mess. Having a defined framework to create reasonable mortgages may be a positive development. Even if that means we have to stop dating guys named after cars, sporting bad hair cuts.

-The Inside Associate

This is New Orleans

After a nice dinner at Antoine's Restaurant nestled in the heart of the French Quarter, what is there to do? The obvious answer is to listen to one of the very persuasive doors nearby and come in for "just one drink.” All of a sudden that rum and coke turns into two rum and cokes, and then a Jager Bomb, and then two hurricanes. Then a drunken stumble into a dark part of the quarter gets you into a "situation" with some shady characters. The night ends as only a night in the French Quarter can: with you trading your cell phone and wallet for your freedom. This scenario sounds eerily like what has happened to our economy in the last 10 years, and to Real Estate in particular.

The thing we need to remember throughout the whole mess is "IT'S NOT THAT BAD!!" America has always had a "woe is me" look at everything. Take the Civil War, for example. We survived that, along with the Great Depression. Nazis? Check. Japan taking over the world in the 80's? Not so much. It’s true that the world is still very much on shaky ground. The Chinese are slowing down and dealing with inflation issues, in addition to cooking the books. The eurozone is extremely problematic with huge currency and sovereign debt issues. However, like the champ its proven to be, the U.S. remains one of the preeminent places in the world to invest.

The globe has become smaller, but it's still growing economically. The United States will be the nexus point for a growing East in India and China, developing South America in Brazil, and let’s not forget about Europe. Some could say that we could become like the United Arab Emirates in a sense. They have pursued policies that have fostered economic growth and development to create the playground of the near east. With sensible regulation and policy making, we too can be the nexus point of a globally integrated economy.

With the end of QE2 and the $8,000 housing tax credit over, we've hit the wall of economic reality. Having hit that "wall" we must sit in this "coma" and just wait. For a country that has little patience this may seem interminable, but it's more than likely our best medicine. Over the course of the next 18-24 months, there will be bargain hunters who are ready to pull the ripcord and parachute into the housing market. More attempts at artificial recovery are only going to delay an already painful process.

The devastation that was post-Katrina New Orleans did bear fruit. Many people left, but many people stayed and rebuilt. With substantial coordination and effort, NOLA now has newer, better schools and hospitals. The infrastructure has been rebuilt and is currently pursuing and attracting businesses. The French Quarter is still filled with great food, alcohol, and revelry. The United States, with some coordination, will once again be the place where wealth is made, products and innovations are devised, and where people can still buy their houses with white picket fences

A New Tradition

The US is a country full of traditions. The American tradition has always to been to throw off convention, lead, and blaze a new trail. One of these traditions is to incorporate new methods of doing things and make existing ideas ours. This dates all the way back to Plymouth Rock and the farming ways of Squanto and his friends. You can look at our Declaration of Independence and constitution and see us incorporating the European ideas on freedom and civil liberties into our own.

If you checked the news in the last few months (or years, for that matter) you've been hearing of the impending doom descending on the American economy. Based on our history of adaptation , and yet contrary to what many well-heeled people think, we should be actively searching for capital inflows from overseas. Over the last few years, the U.S. has been host to many "buying" trips by those from all over the world buying up real estate. The U.S. gov’t and the economically established should be encouraging active foreign direct investment on a much grander scale. There are millions and millions of dollars’ worth of industrial, retail, and office space ready to be bought up for pennies on the dollar. We should be working to responsibly rework the tax code to encourage investment.

In the larger view of the economy, many naysayers have been publicly reticent about taking foreign capital in American companies and brands. I believe unabashedly that this is a fallacy. Some of the most "American" brands in our country are owned by interests outside the U.S. A Beligian company owns Budweiser. Unilever from the Netherlands owns Vaseline and Ben N Jerry's. A German company owns Trader Joe's, and the list goes on and on.

From a global economics perspective, there's no good reason not to be chasing capital. If you’re living in Europe and are looking to safely invest your capital with more than a few commas involved, does investing in some place that uses the euro make sense? The Europeans cannot control the value of the euro or the credibility of those member countries using it. Similarly, if you’re well to do in China, wouldn't you want to put your money someplace where the rule of law matters? For other expanding and developing countries the U.S. maybe down, but isn't out, and it is certainly still a stable haven in which to invest.


This maybe anathema to those in this country who believe “America first” before all else. It's time to wake up; executives all over this country have been investing in foreign nations for decades to our detriment. We have the opportunity to swing the pendulum back our way and with a cheap dollar court industry all over the world. There are millions upon millions of square feet in retail, industrial, and office space available. We can either have overseas investors invest in REITS and other companies, or we can do the "American" thing and chase them down and give them their share of the American dream… and a white picket fence to go along with it.

-The Inside Associate