“Why swim upstream, if the current is moving everything in the opposite direction, right?”
Using economic cycles and bubbles, demographic shifts and a way of sizing up quality-of-life communities to live and invest in.
An excerpt from Book Two in “The Knowledge Path Series” dedicated to helping you make more money from a lifestyle businesses you’re truly passionate about.
Peak around the corner.
About the time of my own mid-life crisis I discovered the author Harry Dent.
He introduced me to economic cycles and bubbles, demographic shifts and a way of sizing up quality-of-life communities to live and invest in.
Amy Poehler’s fictitious Pawnee, Indiana didn’t grow on me until season five when neighboring Eagleton, an ultra-affluent town, was written into the script.
In the sixth season the town of Eagleton, involved in a longstanding rivalry with Pawnee, goes into bankruptcy and is absorbed by Pawnee.
An effort spearheaded by Leslie after she sees no other way to save the town.
Having lived in a small Indiana college town on a bluff overlooking the Ohio River for four years and, then in another rural college town for my masters degree, I sought higher quality-of-life choices in a region that wasn’t so topographically flat.
But where?
- And what if I discover after I move that I don’t like it?
- What do I need to know ahead of time?
- What if I chose a new Eagleton somewhere else and it files bankruptcy?
- That can’t be good – except for Amy Poehler, right?
- Nearly anybody can forecast the future.
How do you know which ones will come true?
I set up “The Journal of 2020 Foresight” after researching the top 100 trends and predictions from a variety of technical, economic, social and political sources.
And, knowledge labs to monitor key indicators in 5-year timelines –
- 2003 to 2008,
- 2009 to 2014 and
- 2015 to 2020.
Why swim upstream, if the current is moving everything in the opposite direction, right?
The first knowledge lab, conducted during the 5-year timeline between 2003 to 2008.
We began tracking some of Dent’s forecasts, especially the following four out of our original 100:
“4 – Basic innovation in communication technologies is allowing more people to relocate their homes to small towns and exurbs, and telecommute to business.
3 – The baby boomers are moving into their vacation-home-buying years, which, in combination with the first trend, will stimulate demand for property in attractive resort towns.
2 – The echo baby-boom generation is now moving into its household formation years, which will stimulate demand for apartments and rental property in the cities, and has already caused commercial property in these areas to appreciate,
1 – There is a broad geographic migration towards areas of the country with warmer climates. You can expect the first three trends to be accentuated in the southwestern United States. “
Back to Harry Dent’s economic cycles and bubble forecasts.
He included a bubble wildcard as a fifth forecast.
The mother-of-all depressions, arriving sometime in the 2009 to 2015 time horizon.
Which presented itself as the mother-of-all Great Recessions.
More on that later.
- But, let’s say you decided to investigate opportunities triggered by the warm climate migration?
- How do you explore the possibilities?
- How do you go about it?
Dent borrowed from innovation, growth, and maturity product lifecycle curves to describe the potential for community growth and real estate appreciation.
You might say he spoke my language coming from my career in high technology.
- Innovation – .1%, 1% to 9%.
- Growth – 10% breakout to 25% and from 50% to 75% and
- Maturity then to 90% – 99% percentiles.
What if the lifecycle model could be applied to resorts – estimating investment appreciation and community growth?
How does that work?
“The time it takes for an idea to move from a .1% idea to a 1% prototype, and finally to a 10% niche in the marketplace (Innovation), is roughly the same amount of time it takes for that niche to accelerate up the curvilinear curve of market acceptance through 50% to 90% (Growth).”
In the innovation stage, the risk is high and the potential reward could be astronomical.
If you found a small pristine mountain community at this stage and moved or invested in a vacation home on a lake, you may see your small down payment and mortgage pay off handsomely decades later.
Or not.
- No guarantees.
- Buy low, sell high.
- As an investor, you’d want to find that goldilocks moment.
You wouldn’t want to invest too soon and wait forever, but definitely not too late when it is way too expensive to buy.
Pick sometime in the early growth stage but before the late growth phase turned into maturity.
When everyone else has heard of the premier destination.
As the mix of community residents begins to shift from High Country Eagles to Wireless Resorters.
You might find Pawnee attractive, but you probably missed the golden opportunity to move to Eagleton.
And by “season six” you’d be glad you did.
In priority order for finding the first three driving trends in one place – broad communications, Baby Boomer vacation-home buyers and echo-boom (Gen-Y, Millennials) entering the rental market, he lists:
- Resort Towns
- Small College and University Towns
- Classic Towns
- Revitalized Factory Towns
- Exurbs
- Suburban Villages
- Emerging New Cities
- Large-Growth Cities
- Urban Villages
What if you’ve already built your mobile knowledge company, “Mobile KnowCo” and weren’t bound by your current fixed location?
How would you know if you found a town to fit your needs?
On your next vacation Harry Dent said to keep your eyes open for:
- “A new look that includes intelligent town planning for increased human interaction; and abundant open space;
- flexibility in home design;
- planning for safety; shared facilities; and high-tech communications infrastructure.”
With those criteria in mind, we initiated coverage of “Resort Towns” in western United States like…
- Pagosa Springs, Basalt and Redstone in Colorado and
- in tropical regions – like Cabo San Lucas in Mexico.
And, continued to aggregate lists of “Best Places” that fit Dent’s other eight categories of towns and cities.
From those thousands, we focused on and curated only those from six western and island regions:
- Hawaii and other Tropical Regions;
- Texas Regions;
- Southwest Region (Arizona, Nevada, Utah and New Mexico);
- Pacific Northwest Region (Washington and Oregon);
- California Regions; and of course my favorite
- Rocky Mountain Region (Colorado, Montana, Idaho and Wyoming).
But guess what?
All vacation destinations aren’t equally attractive and the reasons why aren’t obvious until you dig in and find out for yourself.
So, the only real question becomes, which one is right for you?
Especially if you longed for a fresh start.
Or were forced to take one.
(22) Selectively evaluate the best quality-of-life communities to live in and weigh the tradeoffs of risk and rewards for accruing real estate appreciation along a progression of rural and small towns that meet what your pocket books can afford.