- The Washington Times - Wednesday, November 15, 2006

A little more than a year ago, I received a phone call from a publisher in New York City. She told

me that she was working on a new book for Donald Trump and collecting real estate advice from various professionals across the country.

She asked me if I’d like to contribute with no guarantees that my advice would be published. I laughed at the notion that “the Donald” or his editors would actually select my advice from the thousands collected, but I responded anyway.

Lo and behold, last week I received a package in the mail containing Mr. Trump’s new book, “The Best Real Estate Advice I Ever Received — 100 Top Experts Share Their Strategies,” along with a letter from the publisher thanking me for my contribution.

I flipped through the book, and there it is on page 213. I also saw that fellow Friday Home Guide columnist M. Anthony Carr is a contributor.

When I received the phone call requesting the contribution, the Washington area real estate market was on fire, with buyers tripping over themselves to write contracts.

The subject of my advice was a warning to would-be real estate investors that hot markets aren’t sustainable and that patience is often required for the investment to pay off.

Real estate has proven to be a good investment over time, but it does not lack periods of stagnation.

Let me describe the real estate market during the first half of this decade. There were multiple buyers for every house on the market. Prices were skyrocketing, and buyers were stripping themselves of every protection by eliminating such common contract contingencies as a home inspection, the ability to obtain a mortgage and an appraisal.

Clearly, such a hot market is not sustainable. My advice to Mr. Trump was simple: Recognize that real estate, while a good investment over time, may require patience and staying power.

Folks expecting to double their money in a year are in for a rude awakening if their investment is ill-timed. If property values dip or the rental market slows, the investor must have the ability to hold the investment long enough to overcome dips in the marketplace.

Let’s fast-forward to the present. It turns out my real estate advice wasn’t bad.

I turned to my friend and true real estate expert, Bill Barnes of Barnes Real Estate Co. in Alexandria, and he summarized the current market like this: The number of days on the market for a new listing is approaching 90 days, compared with less than a week two years ago; home prices are declining because houses are being priced at the same levels as when the market was at its peak. Since there are far fewer buyers, sellers are coming off those peak prices.

A “herd mentality” exists in the marketplace. When the market was hot, investors flocked to write a contract as soon as a property came on the market.

Today, with the help of the media’s incessant negative reporting on the real estate market, the same herd is wary to write a contract, fearful that property values will fall. This creates fewer buyers while inventory grows.

The Washington-area real estate market is bound to lose a bit more steam before it picks up again. But Washington has proved to be resilient, and someone who buys real estate has made a good investment if the intent of the purchase is a long-term investment.

Henry Savage is President of PMC Mortgage in Alexandria. Reach him by e-mail ([email protected]pmcmortgage.com).

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