“Real-Estate Investment from a Futures Perspective”

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Jim Lee is the Founder of Strategic Foresight Investments. He is a veteran financial advisor and market strategist. He has gained media attention as Delaware’s only professional futurist. Lee has a graduate degree in Strategic Foresight from the University of Houston.

He is prominent keynote speaker and presenter on trends, Jim has been quoted by the Wall Street Journal and Financial Planning magazine. His strength is helping people look around a few corners as he shares ideas about trends impacting real estate.

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Hello and welcome back to the Dr. Nilda Business Foresight Show. This month as you guys know I am dedicating it to futurist and today I have a very special futurist. His name is Jim Lee. He is the founder of Strategic Foresight Investments. So, you see strategic foresight is not just in business. He’s a veteran, ab financial advisor and a market strategist. He has gained media attention as Delaware’s only professional futurists. He has a graduate degree in foresight from the University of Houston. He is a popular keynote speaker and a presenter on trends. Jim has been quoted on The Wall Street Journal and Financial Planning Magazine. In today’s interview, he’s going to help us look around a few corners and share some ideas about trending impacting real estate. Welcome Jim, how are you?

Wonderful doing great thanks. Thanks for having me.

I’m really happy and really excited to have you because I know so many realtors so many people that are either brokers or agents and even if they’re not there’s a lot of people that use real estate as an investment. So, I would love to talk to you about how to merge this. I want to start kind of from the beginning because you’re a financial advisor and then you moved on and you’ve just kept building on that. Now you actually do futuring on real estate and on investing. Tell me how did you do that? How did you merge that?

I guess technically I’m a financial futurist and foresights just one of several different tools in my toolbox. I started back in the 1990s as a conventional financial planner. I did that for a number of years really wanted to focus more on portfolio management. There’s actually a certification there is a chartered financial analyst which enables you to run through the analytics on individual stocks, mutual funds, ETFs, etc. Then really beginning in 2000 I had the option of getting an MBA doing the conventional thing or becoming a futurist, which just sounded like so much more fun. You have your doctorate in foresight right you know how fun it is. It took me six years to graduate. I enjoyed it so much. I was absolutely in no hurry whatsoever to finish that particular program. My Master’s project involved using scenario planning as an asset allocation tool to figure out how to build portfolios that are robust across a range of possible futures. That’s where it all started for me and that is sort of looking defensively how can you build something that’s solid regardless of what happens. I was with that firm for 14 years. We were bought out by a bank and then I wrote a book Resilience and The Future of Everyday Life. The topic of that book is generational strategies for dealing with this period of extended economic uncertainty. That’s what I write about. I’ve done a lot of speaking on it. It’s been a really interesting few years.

I can only imagine. I know it’s been a very fascinating ride for me. That’s why I just thought bringing this to the forefront and showing people, what futurists do. There’s so many different ones that are doing so many different things. But, yours in particular I thought was very interesting because of the real estate. Let me ask you a question why work with a futurist? Why would somebody rather than go to a conventional investor or a financial planner go to a futurist?

It’s really about looking a little further out to find the really big opportunities and the really big risks.

I’m always talking about those opportunities and those risks. In your line of business what kind of opportunities come up and what are the risks that people can avoid? As you’ve seen them what risks have you come across?

We’ll talk about opportunities then we’ll talk about risks. There’s a methodology called foresight scanning where you look across the landscape and kind of see what’s coming. Those follow what are referred to as steep trends. Those steep trends stand for social, technological, economic, ecological and political. Most things fall in one of those categories.

If not several.


Awesome so, those are the opportunities that you’re looking for for your clients?


In terms of threats, what threats? Most of the time when you’re making an investment or financial investment whether that be real estate or your children’s college you never think of threats. You think this is pretty safe I’m working with a financial planner he knows what he’s doing. He’s got this. What are the possible threats that you try to avoid.

A few things on the horizon right now. First of all, most asset classes appeared to be somewhat expensive relative to conventional levels of valuation. Stocks aren’t cheap. Bonds have the lowest yields that they’ve had in 50 years. Actually, with the change in the Federal Reserve Chairman interest rates may start to go up and that may have impacts on stocks, bonds and real estate. There’s a lot of technology shift happening right now. If we look at retail for example we’ve had more stores closed this year than opening for the first time since 2008 2009. We’re also sort of seeing the disappearance of the middle. Whether it’s the middle man. Whether it’s the middle class. Whether it’s the middle market. So, what you have is you have the very high end. You have the very low end and you don’t have so much in between anymore. I think that that’s a risk for our own stability.

Now when we’re talking about real estate explain to me how foresight applies to real estate?

Well anyone involved in building or construction has to have a long-term perspective because if you’re building a house that alone can be a two to three-year project. If you’re building an office park or a city block that can take ten years or more. So, things can change literally as you’re in the process of building something.

In terms of someone who is a broker someone who is an agent, how would futuring, scanning and looking at these all of these possible futures apply to them?

I think it applies to the markets. Particularly as it relates to not only what their clients want today but what their clients will want 10 years from now. So, things are definitely changing right now. I posted up an article earlier this year about real estate disappears sort of controversial in real estate. It’s never going to disappear entirely but it is going to shrink and we are seeing that happening right now. If you take a look at the amount of office space that the average worker has today it’s about thirty percent less than it was just ten years ago. Some of that happens from people working from home. Some of that happens from hot-desking. Some of that happens from co-working but, we’ve really torn down the walls in our offices over the course of the last few years. If you look at the real estate market ten years ago it was all about having really big houses. You had companies like Toll Brothers building houses of 3,000 square feet and bigger. Today as those boomers who bought those houses are trying to move out and into over 55 communities they don’t have anyone to sell them to because their kids can’t afford them. They have high property taxes. They have high mortgages. So, these large properties that were very sought-after ten years ago are sitting on the market now for six to twelve months on average before they can get sold.

When you’re looking to either a buy real estate or sell real estate what direction do you suggest that people take?

I’d say that I’m a little bit more conservative than most financial advisors in that I don’t necessarily look at a home as an investment that you’re going to make money on. I view it as something that you live in and it adds to the quality of your life. You want to enjoy it. You want it to be the right size, the right location and fit who you are. But going forward, I also believe that real estate is going to have more difficulty as an asset that appreciates in part because of interest rates and in part because we need less real estate than we have in the past.

A few months back I was at an event and I met a woman who does real estate for small spaces. So, she sells and she helps organize small spaces. Her take on it was that people are wanting smaller space and paying smaller mortgages and less rent so that they can travel more, they can be more transient and this way they don’t feel bad that they’re paying rent while they’re away like snow birds. They’re away for three four months out of the year or they’re traveling the world for six months out of the year. She’s seeing that that’s a huge growing trend. I was so fascinated by that because I’ve never knew that. I thought well no people want more space they have more children in it but she said it’s quite the contrary. She said even people with families are opting for smaller space and that’s her niche. Her niche is converting those small spaces into livable spaces. They’ll have everything that they need and they don’t have to have any of the extra. She was explaining all of the savings because there’s a lot of stuff that they don’t buy because it doesn’t fit in the home.

Well, it’s liberating. The big thing happening right now, I started writing about this five years ago, is the tiny homes movement of homes being built smaller than a lot of apartments. We’re talking five hundred square feet or less. Some of them have wheels so you can literally tow your home behind you and park it somewhere if you wanted to. But the really cool thing about this idea is that a lot of these so called tiny homes can cost forty thousand dollars or less which is equal to the price of the down payment on a conventional home. So, if you could think about what it would be like, or sort of fantasize in our case, to have no mortgage at the age of thirty then life kind of changes a little bit. You’ve got a little bit more security. You’ve got some options. You’ve got the ability to travel or to have a startup and I think that’s very interesting and very empowering.

I know you do a lot of talks with realtors and people who are investors in real estate what would your recommendation be?

First of all, I think we’re moving away from mass production to what I refer to as mass design. The opportunities here in real estate isn’t necessarily to do more it is to do better and tear down the old stuff that nobody wants and build new stuff. Stuff that’s livable, well designed, walkable and urban interesting. It’s not about converting farmland or unused property to commercial housing that’s kind of done. Four of the trends that I’m following now okay the first is urbanization. That is the very young and the somewhat older are moving back into the cities because that’s where the opportunities are for entertainment, for work, for networking, dating all of the above. So, you’re seeing great population growth within the major cities specifically. The next trend is simplicity which we talked about. Using what you need and cutting off the rest. Cutting off the fat living basic here. The third one is flexibility which means that people are going to want to be able to change when they need to. So, there’s some really interesting things that have been going on in the working space with we work in co-working where you rent an office by the month. You have a shared space with other entrepreneurs and we’re seeing some of these models moving into the housing markets now where there’s a group out there called Rome where for eighteen hundred dollars per month you could have sort of a never-ending timeshare. You can live in London. You could live in Miami. You can live in Singapore. You could live in Bali. With one weeks’ notice, you could move your apartment to the other side of the planet right. I find that really interesting to the extent that we have a generation of millennials that are petrified of making long-term commitments. The challenge is how can you make real estate more fluid? How can you make real estate adaptable to a generation that doesn’t want to commit? There are some huge opportunities there. Then the last one is mobility and that is being able to move from one opportunity to the next because people don’t have jobs for 40 years anymore. They have jobs for a few months to maybe two or three years you. Ask the average millennial how long they’re going to stay with their current employer and they say three years that’s it. I’m done we’ll move on. Their housing needs to be flexible enough to deal with that.

Now that I’m listening to you I realize I was ahead of my time. I never stayed in a job for more than two years because I felt that it tapped out. I was like ok I’ve learned everything I needed to learn here and then I moved on to the next job. I remember my friends the joke was just pencil her phone number in and I mean of course that was before cellphones just pencil her job number in because she’s going to change it. Anywhere between a year or two and she’s out of there. But I felt that that was for me. Those were very significant career moves because I was able to move up. This was like back in the 80s and I find that there’s a huge difference now where the Millennials are very transient. They’re not longevity no matter where they are. What you’re telling me is that this is going to apply to everything even to the living spaces?

You bet. Personal reinvention is now a career survival skill and you were an early adapter. You broke the code before everyone else did and that makes sense because you’re a futurist.

You’re saying that this is just beginning to mold ways of people adapting. I was looking at also education and academia as a whole. I think schools are also going to start to access less real estate because there’s also been a huge change there. I am imagining that that’s also going to change. They’re going to need a lot less real estate. There’s been so many problems with sororities and so this is all stuff that they can actually obliterate by just not having it and changing their model.

The education system has not been disrupted yet but it’s coming soon because again if you look at college enrollment I actually think that we may have hit peak enrollment based on our demographics with the Millennials just graduating. Now you’re going to have a lot of universities with a lot of overhead trying to figure out how they can make up for that lost revenue. So, it’s going to be really interesting watching that unfold over the next 10 or 20 years.

I think in terms of real estate that’s going to also be a huge hit on the schools because it’s not just the heavy overhead but even the space. I think they’re just not going to need as much. This is a very interesting trend to follow closely. We’re coming to the end here. What are your, if you can give me maybe three, suggestions that you would have for real estate if you want to give people that take away? What would that be?

I’d say the biggest take-home would be to consider how flexible your spaces can become. One of the big trends that I’m following right now is sort of the in-law suite sort of the backyard cottage as it were which can do any number of things over the course of your lifetime. It could be your personal office to do podcasts in and whatnot. It could be a place for you to receive second income from renters. Maybe a place for your adult children or as you get older maybe it’s a place for you when your children’s family moves into the main house and all you really want is a cottage and a place to be near your family. When you look at real estate to think about not only what it is now but what it can become as well.

And as people are living longer they have to kind of take that into consideration also. So, people are actually living healthier longer lives that’s also going to have an impact on their lifestyle.

Absolutely we all get a do-over. We get to have many lives so the price of one and do a lot of different things live in a lot of different places and we need to have homes that reflect that.

We’re going to end here. I would love to have you back. Where can they get your book?

It’s on amazon.com Resilience in the Future of Everyday Life and it’s been out for five years now. If you look at it it’s interesting because a lot of it has already happened. A lot of the trends that I wrote about. I’m actually working on a new book now on foresight investing which talks about the investment mega trends as it were of the next decades. That’s my current project.

When will that be done?

We’re probably looking at two years.

I know because the research takes time but that’s fantastic I can’t wait till that happens and we’ll have you back for that. But in the meantime, I think the beauty of having your book is for people to understand how futurists think and how things unfold based on the information that we have. I think that’s honestly the big takeaway that people understand that futuring applies to everything and every area of our lives. If we start looking at life this way and we start understanding the power of futuring you can see some really excellent opportunities and avoid some pretty rough threats. We don’t typically think about that and unfortunately until it happens. This is really where I want to be able to bring people to understand that futuring is really critical this day and age more than ever.

It’s a powerful tool for business.

It doesn’t matter what business you’re in and it doesn’t matter what you’re doing. I think this is excellent. Thank you so much James for being here with us, for sharing your insights and your information is going to be is going to be below and we’re also going to have the information on your book.  

Wonderful thank you so much.

We’ll talk soon thank you okay bye-bye.

Interview With James H. Lee (“Jim”) Founder of StratFI

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