Appreciation

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.

Bubbles Bursting

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.

Any Poehler’s Leslie Character

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.

Fictitious Pawnee, Indiana

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.

Top Forces, Trends and Predictions

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.

The Warm Migration Trends
  • 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.

S-Curve of Growth

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…

And, continued to aggregate lists of “Best Places” that fit Dent’s other eight categories of towns and cities.

Southwest Region from Wikitravel

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.

Tomorrow

“It’s impossible to know in advance how many business ideas will spring up to disrupt or even replace existing industries.”

Nest Egg
Seared into their brains is a haunting future in which they outlive their next egg, not having saved enough money for retirement.

 

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Part One in a 3-Part Series.

Please remember.  Check in with your financial planner as the following trends and opinions change and may have before you read this.

Aging Baby Boomers

Sometime in 2015 Millennials overtook Baby Boomers as the nation’s largest living generation.

Most everyone older and younger than the Baby Boomer generation grew tired of living in its shadow.

Thanks, Baby Boomers

And hearing about its impact on the economy, real estate, and well, you name it.

The oldest Millennial was born in 1981 and the youngest  in 1997

So doing the math for you, it works out like this.

Millennials (ages 18 to 34 in 2015)  numbered 75.3 million while the Boomers (ages 51 to 69 in 2015) dropped slightly from the decades long, popular estimate of 75 million to 74.9 million.

One estimate projected  75.4 million Boomers lived in 2014.

The bottom line?

Ain’t No Spring Chickens

They aren’t babies any longer.

Fewer and fewer of them will be around each advancing year.

In between, as you recall, lies the Gen X population (ages 35 to 50 in 2015.)

Sandwiched Gen-X

They get no respect.

  • And they’re already sick and tired reading or hearing about the older and younger generations.
  • But, they’ll have to get used to it since the Millennial population is projected to peak in 2036 at 81.1 million when the Millennials reach 56 years of age
  • By 2050 there will still be a projected 79.2 million Millennials.

Generation X became the “middle child” of generations.

Their ages spread out over 16 years compared to the 17 years of the Millennials

Knight Rider Kids

Though the oldest Gen Xer is now 50, they shouldn’t give up.

They can still become number two, if they try harder, or at least eat healthier and workout more often.

Actually, they can just wait until 2028 to outnumber the Boomers.

There will be 64.6 million Gen Xers and 63.7 million Boomers.

Gen X population will peak at 65.8 million in 2018.

Now back, to Baby Boomers.

They were all that.

The largest generation since the 1950s and 1960s having peaked at 78.8 million in 1999.

The Lone Ranger on Black and White TV

By mid-century, the Boomer population will dwindle to 16.6 million.

Talk about a boom, then a bust!

Let’s examine how the two huge generations will impact the rest of us.

Aging Boomers and coming-of-age Millennials will accelerate changes in the economy.

No question.

Housing Regrets

But, not everything is rosy or the same for both generations.

  • Both Baby Boomers and Millennials  will increasingly feel squeezed financially.
  • Roughly 150 million Americans feel squeezed, so they’re not alone.
  • But, chances are they both account for most of the 150 million citizens.

Just compare the median ages of both generations as of 2015.

Baby Boomers, age 60.

Millennials, age 25.

The 25-year-old Millennials, having lived through the Great Recession, find themselves either unable or unwilling to spend.

While the 60-year-old Boomers (parents or grandparents of Millennials) have been playing savings catch-up.

Seared into their brains is a haunting future in which they outlive their next egg, not having saved enough money for retirement.

Nest Egg

Which may last as long as 35 more years.

Or, as one financial expert tells them,

“You’re just going to have to live with lower rates of return.”

Steps:

(6) Anticipate changing circumstances and economic cycles.

(7) Persist and pivot to navigate external threats and opportunities.

(17) Sketch out your trajectory in 5-year time frames.  Will we fall into another recession?  Absolutely.  Will you be ready this time with future-proofed strategies?

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

Wireless Resorter or High Country Eagle?

The impact on rural and remote quality-of-life counties will be unevenly felt across the landscape posing different demands for local goods and services.

Enjoying Pristine Moments
The Southwest, Rocky Mountains, and Northwest (in that order) will have the highest population growth and the greatest potential real estate appreciation in the nation.

Final installment in a 4-Part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Part Three :  Who’s Free to Move About the Country?

Part Two: Demographic Lifestyles and Buying Power

Part One: Determinism

Here’s the case for leaving California, which many people already know.

California’s high cost of living and strict environmental standards discourage many businesses from locating there.

As a result, all of the states around California are experiencing explosive population growth.

Here’s the case for staying put in California for the Golden State’s residents.

Love Affair with California

Great weather, abundant recreational opportunities, and an innovative social and technological environment all contribute to this fact.

But, where will you find growth and equity appreciation?

The Southwest, Rocky Mountains, and Northwest (in that order) will have the highest population growth and the greatest potential real estate appreciation in the nation.

Southwest Region from Wikitravel

Like most North Americans, according to Dent, I prefer to live as near as I can to the coast.

Because of the vast natural beauty

Businesses have also benefited from access to shipping ports, he says.

This, in turn, means that coastal areas were the first to become congested and expensive.  

Santa Barbara, Los Angeles and San Diego are close to merging into one metropolis, as have Monterey, Santa Cruz, San Francisco and Santa Rosa in northern California. 

Metropolitan Encroachment

Fortunately, the Central Coastal area between Santa Barbara County and Carmel in Monterey County doesn’t lend itself to mega development.

Big Sur in California’s Central Coast

In fact, those  coastal areas that still had underdeveloped land suitable for building have grown the fastest. 

These areas include Vancouver, Seattle and Portland in the Northwest. 

Pacific Northwest from Wikitravel

But areas in the Northwest – Vancouver and Seattle- are quickly approaching population saturation.

They are becoming increasingly expensive, which leaves only Portland to develop strongly in the coming decade.

As a result of the congestion and expense along the coastal areas, it is inevitable that people and businesses will begin looking at inland areas to find attractive towns and cities.

So it’s not just out-of-state migration from California contributing to Dent’s trend.

Rocky Mountain Region from Wikitravel

That’s why we’re seeing such remarkable growth in the southerly portions of the Rocky Mountain area and in desert states including Arizona, NewMexico, Utah and Nevada. 

As the Great Recession’s lingering effects dramatically decrease non employment-driven decisions to relocate can significantly play a greater role.

What’s the impact driven by a segment of our population not driven by employment-related criteria?

Employment drivers for 60-64 year olds is 25% as strong as that for 30-34 year olds.

Concentrations of 55-75 year olds in rural and small-town population of 55-75 year olds will increase two-thirds from 8.6 Million to 14.2 million between 2000 and 2020.

Back Road Magic

The impact on rural and remote quality-of-life counties will be unevenly felt across the landscape posing different demands for local goods and services.

Empty nesters will no longer need the living space they once enjoyed.

Especially after the last of the live-at-home 20-29 year old Millennials strike out on their own.

Some empty lifers with champagne tastes on “Budweiser” budgets are attracted to High Country Eagle communities filled mostly with

  • Rustic Eagles,
  • Rural Cowboys,
  • Small Town Borders, and
  • Satellite City-zens.

And, to those Wireless Resorters with resort amenities for their second homes:

  • Distant Exurbans,
  • Resort Suburbans,
  • Maturing Resorts, and
  • Premier Resorts.
Festive Resort Living

If you couple changing housing needs with the early retirement options available to the more affluent empty nesters, then you have newer early retirement options.

What both categories of empty nesters, the 45+ and 55+ age groups, have in common is that stage of life where they are no longer raising their children in their homes.

Steps:

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Who’s Free to Move About the Country?

California doesn’t have a corner on the market for individuals and businesses seeking pristine natural quality-of-life communities with an open and innovative social environment.

Psychologists have found that midlife is typically a time when many of us take stock of our values and goals. 

Part Three in a 4-part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Part Two: Demographic Lifestyles and Buying Power

Part One: Determinism

What about those aging Baby Boomers?

If they follow the broad trend lines, they will retire in place.

Importance of Grandchildren

The community they now call home after their last corporate transfer.

Where their children and grandchildren call home.

Dent recommends checking out the best suburban and exurban communities on the edge of attractive cities in addition to the more compelling resorts and university towns.

If we look at the trends in which cities and geographical areas have attracted the most retirees in the last decade we can get a better clue as to where the growth will continue to accelerate as the pre-retirement and retirement age groups grow in the coming decade. 

Mammoth Mountain Getaways

For this next part, remember what Mammoth realtor Paul Oster wrote – Dent’s track record makes him a better demographer than an economist.

Remember that on a 63-year lag for average retirement, baby boomers will be retiring in rising rates from 2000 – 2026.  

After this boom ends, deflation is almost certain to ensue for at least a decade and possibly into the early 2020’s. 

Resort Retirement Benefits

Dent said that means the cost of living, the price of real estate, and the interest rates should drop substantially.

This deflationary downturn will offer direct benefits to real estate owners and buyers. 

Has the time come and gone – when Dent’s trends wither on the vine?

We only have to review Lake Tahoe and Mammoth Lake’s real estate markets to call into question the accuracy of Dent’s first trend.

Lake Tahoe Traditions

The first trend is a broad migration pattern towards exurbs and small towns, many of which will continue to hold most of their value through the downturn.

This third wave of migration – an exodus from the suburbs – will accelerate through the first half of the 21st century, continue long after this Deflationary Shakeout ends.

The second trend will be a strong and consistent rise in retirement home purchases.

Mountain Retirement and Second Homes

Baby boomers will drive the market for this kind of property from 2002 into around 2030. 

A third long-term real estate trend to take advantage of after late 2008 is the rising demand for rental property in urban and suburban areas.

Why?

Apartments will be in relatively strong demand through about 2017 due partly to the aging of the echo baby boom generation. 

Seems reasonable, and while we may have dodged the “Mother of All Depressions” he predicted instead with the Great Recession, Dent’s view on demand may be currently playing out.

Demand will be further strengthened by the effect of the depression era on individuals who are of an age to shop for starter homes, but who must delay this purchase until the economy improves.

Stuff happens in our lives.

Second Half Dream Homes

Recall two midlifers, Johnny from Boston and David from Canada — two refugees from the cold weather who moved to Cabo San Lucas to start over.

Dent writes

Psychologists have found that midlife is typically a time when many of us take stock of our values and goals. 

He ticks off several reasons.

We attain a certain level of affluence through the combination of high earnings and a sudden drop in necessary family expenses as children leave the nest.

What’s Important in Our Lives?

We confront our mortality, either by taking care of ill or elderly parents or by seeing the inevitable aging in ourselves. 

For baby boomers and older Gen X-ers each reason can usher in a more positive ending.

Above all, retirement looms on the horizon as an expanse of freedom that many of us, working 8-to-5 jobs, have not known before. 

All of these reasons compel us to pause, reflect, and consider how we are going to live the rest of our lives. 

California doesn’t have a corner on the market for individuals and businesses seeking pristine natural quality-of-life communities with an open and innovative social environment.

While Dent believed California would grow, other communities in the West were forecasted to grow much faster.

And without paying a high price tag for a similar lifestyle.

Dent suggested these additions to your Western bucket list.

From Hollywood to Silicon Valley, along the coasts into Portland, Seattle and Vancouver, and inland to  Utah, Colorado, Arizona, New Mexico and Texas, we see the most innovative cities in America spawning most of the growth companies.

What do they have in common?

These businesses, primarily in the fields of high technology and entertainment, are the backbone of the new information economy.

If you’ve ever lived or traveled in the West, you know there is a clear difference in culture between the western states, the east coast, and the central areas of North America.

Steps:

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Demographic Lifestyles and Buying Power

As time marches on they’ll move the Baby Boomers aside as target real estate buyers of resort property …

Resort Vacation Home
Will the majority of retirement age baby boomers move to remote resort locations like Mammoth Lakes, Dillon, Colorado or in recreational areas like Lake Tahoe?

Part Two in a 4-part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Part One: Determinism

For each of the following predictions more current forces may delay and extend the age ranges for the Millennial generation.

But first, what about the Gen X generation?

They “occupy” several life stage demographic profiles.

Recall that the Gen X cohort accounts for roughly 51 million who were born between 1964 and 1980.

By 2015 they range from between age 35 and 50 years old which stretches across

Active Midlife Couples
  • 30-44 year old Singles and Midlife
  • 35-54 year old Families
  • 45+ year old Families and Empty Nest Couples.

They have or are just now reaching their “peak spending years,” between the ages 46 and 53. Dent correlates demographic age to real estate segments.

Spending on trade-up homes accelerates from age 35 and reaches a peak by around age 44.

As time marches on they’ll move the Baby Boomers aside as target real estate buyers of resort property …

Sales of vacation property begins to accelerate from age 46 and peaks around age 52 to 55.

The Baby Boom generation conformed except for those members caught by surprise during the Great Recession.

Investment in retirement property begins to accelerate from the late 50s and peaks in the mid-60s.

In 2014 the huge generation numbered 75.4 million.

Born after World War II between 1946 to 1964, their median age 60 years old anchored their range between 51 and 69 years old.

Having moved through all of the other life stage and age segments they now occupy

Retiring Baby Boomer Couples
  • 55+ Baby Boomer Couples,
  • Empty Nests, and
  • 65+ Couples and Seniors

In addition, Dent describes how broad geographical migration patterns significantly influence long-term real estate trends.

Certain areas of the country clearly and consistently have experienced faster growth than others. 

For example in 2002 …

The Northeast and the Upper Midwest Plains states have generally been losing population; the Midwest has seen flat or modest growth; and the Southeast, Southwest and Northwest have all been growing substantially.

Will the majority of retirement age baby boomers move to remote resort locations like Mammoth Lakes, Dillon, Colorado or in recreational areas like Lake Tahoe?

No.

Part Three: Who’s Free to Move About the Country?

Steps:

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.

Determinism

Psychologists have found that midlife is typically a time when many of us take stock of our values and goals. 

Resort Investments
Predictable Real Estate and Consumer Trends as Generations Change Aging through Life Stages.

Part One in a 4-part Series evaluating real estate and consumer predictions as generations transition throughout successive life stages.

Fifteen years ago in 2002, as Mammoth Lakes realtor Paul Oster reminded us, Harry Dent built several real estate scenarios on shifting demographics called “Age Demographics, Buying Cycles and Real Estate Appreciation”.

And years earlier management guru Peter Drucker wrote about how dismal most predictions turn out, except for one type.

Those based on fundamental demographics.

If I remember correctly he coined the phrase “Demographic Determinism”.

Dent said as a new generation enters the workforce around age 20, we can expect commercial real estate to boom.

20-Somethings in the Labor Force

But, why?

The influx of new workers stimulates demand for office space and manufacturing facilities. 

Since these new workers are also consumers, there is increased demand for new stores and shopping malls.

Of course Amazon, losing money quarter after quarter in 2002, had only just begun to exercise its disruptive influence over traditional retailing.

Why Go to the Mall?

And the older Millennials coming of age in high school may have remembered a time when Amazon didn’t exist, but their younger brothers and sisters act as if they didn’t.

But as a rule of thumb, when it comes to residential housing you can identify five age-specific buying cycles.

Over the life span of a generation, spending on each category accelerates to peak at predictable age intervals.

When an entire generation goes through such predictable property spending patterns, we get a macroeconomic view of the wave-like fluctuations in real estate demand.

As a result, investors can know years and even decades in advance what kinds of properties are going to be hot and when. 

For example, someone who is 52, a “youngish Baby Boomer” or “oldish Gen Xer,” and at the peak of his earnings doesn’t typically rent a one-or two-bedroom apartment for himself—though he might rent one for his 24-year old daughter.

Dream Vacation Home

Instead, he’s thinking about what kind of vacation home he wants or, if he’s already purchased it, how to transition to retirement in 10 years or so.

But, his daughter, just now transitioning from school-to-work, represents the median age for the Millennial generation.

In 2015 we already know her generation ranges in ages from 18 to 35.

They will be segmented into at least six life stage lifestyles.

  • 20-29 Year Old Singles
  • 20-44 Year Old Families
  • 25-54 Year Old Singles and Families
  • 30-44 Year Old Singles and Couples.

What’s their impact on apartments and retail shops?

The demand for rental apartments and retail space including shopping centers, begins to accelerate from 19 and peaks around age 26.

Here’s where the rules of thumb may need to hitch hike down the road for a few years.

Demand for Family Starter Homes

Starter home purchases begins accelerating at around age 26 and reaches a peak around age 33.

Oops.

Maybe, something else is going on, as we track Millennials through time.

Part Two: Demographic Lifestyles and Buying Power

Steps:

(19) Anticipate the growing shifts in life and business. Nobody wants to swim upstream if the current is moving everything in the opposite direction. Clue your fans in.

An excerpt from Book Five in “The Knowledge Path Series” dedicated to helping you find the place of your dreams in the Sierra Mountain resorts.