Real estate agents like to say that the best time to buy property is "right now."
That's not surprising. If you asked me, I'd tell you that "right now" is the best time to buy a newspaper.But now the Realtors have someone tooting their horn for them. According to Henry S. Brock, of Salt Lake financial consultants Brock and Associates Inc., now is the best time in years to invest in Utah's real estate market.
"Many markets, such as Salt lake City, that exhibited the greatest overbuilding in the mid-1980s have experienced dramatic turnarounds in the past 18 months," said Brock, noting that the 6.1 percent inflation rate of last year was the highest in nine years.
"Inflation acts to further depress new construction," said Brock, "since rents and values of existing stock must rise by the same amount over the long term to justify new construction."
In other words, savvy investors buy when prices are low, not when everyone else has already climbed on the train.
Brock blames the news media for some of the perception that real estate is a poor investment, saying reporters "continue to focus on the past sins of overbuilding, excessive capital/lending and ineffective government regulation."
The overbuilding that eventually helped create the savings and loan crisis and generally put much of the banking community on the brink is old news, said Brock, but "the media persist in reporting yesterday's market conditions and problems because they make good headlines today, or they talk about soft home prices, which have little or no relation to the performance of income property."
Savvy investors, he notes, buy when prices are low, and quotes well known real estate investor Sam Zell, principal shareholder in First Capital Corp. of Chicago, as proclaiming 1990-91 as the best buying opportunity in his lifetime.
"We must learn to invest like we shop," said Brock. "Such markets as Houston, Denver, Dallas, Salt Lake City, Phoenix . . . are the factory outlet malls of real estate. Does it make sense to wait until a property doubles in value to get excited about it? Isn't it a better investment now?"
Since no one could have forecast such events as the Persian Gulf war, the fall of the Berlin Wall and German unification, or the failed coup in the Soviet Union, investors must be prepared for all eventualities, said Brock.
Since income real estate represents about 20 percent of all investment assets nationwide, Brock believes it is too large a category to be left out of the prudent investor's portfolio.
Brock says that, despite what investors may have heard, investment in grade-income property has not declined but has risen an average of 2 percent over the past three years.
"Just because a bank writes down half-empty real estate by 50 percent doesn't affect the value of the 95 percent occupied building next door."