I live in the what experts call the worst real estate market in the country, South Florida.
Miami and Ft. Lauderdale are in the top five markets in the US in foreclosure rates, number of unsold homes relative to population, prices have declined 25% or more in the past year and have recently been predicted to decline another 20%-25% this year.
However, though an acquaintance, who is a high end real estate broker in the area, I have learned that no less than 5 homes have sold in the past 60 days for between $5.2 Million and $12.5 Million dollars.
All were private sales, none were foreclosure sales. One was even a sale of a condo just under construction.
So where there was 7 homes on the market less than 60 days ago with prices between 5M-12M there are now only 2. They were all beachfront.
Some sales are so recent there are still listed online at realtor.com even though they are sold.
So what does that say about the economy, and not only people’s ability to spend money but their willingness to do so.
Remember the 3 rules of real estate, location, location and location.
Well here are the 3 rules of domaining. Quality, Quality and Quality.
When times get tough, the money flow slows.
It does not stop.
Domains like real estate still sell.
The ones that are high quality.
Marginal domains become hard to move in a slowing economy.
They get lost like unexceptional pieces of real estate.
But if you got beach front property, if you have high quality domains, there is a market, there are buyers.
For Quality.
Great post – domain name location is online – which is the Perfect spot.
Quality and $$ value is in the eye of the buyer and seller.
I agree – in hard times good and premium domains are still very good investment. While the worst ones are more risky business. Also have in mind that the US real estate as well as domains are still much much cheaper for other domainers (for example from Europe) due to the weak $.
Mike,
I am seeing much the same in the properties I have been watching. The market for good property with a good location is selling. I would say the market is HOT right now. The news media is so busy doing what they do that they miss things until months afterwards. Those that bought at the top of the market, are on the railroad tracks or end of a runway at the airport and paying $750k for a townhouse, are screwed. They were screwed the day they bought because they did not buy smart.
Same with our domains. We are starting to see some very serious interest from national companies that have watched CNN.com buy iReport.com. Watched CBS make the smartest domain purchase yet in the acquisition of Cnet. And the Pizza.com auction whether sold or not was a BIG event. Plus funds.com and several others. It takes a recession to shake things out. It is why I said over and over at TRAFFIC that during a recession there is much opportunity. Recession is only a bad thing if you get caught unprepared. If you look at a recession as an opportunity, the rewards will follow. There is a lot of opportunity right now. More than I have ever seen in my years on the net and more than I ever saw before there was a net.
“There is a lot of opportunity right now. More than I have ever seen in my years on the net and more than I ever saw before there was a net.” – Rick Schwartz
Rick,
Now is an even better time than the mid 90’s or the early 2000’s? I agree there’s great opportunity out there but it’s real tough for the next Kevin Ham, Frank Schilling or Rick Schwartz to emerge today than back then. If you could elaborate, I’d greatly appreciate it.
Tony
Rick can speak for himself.
However from my perpective you have in the domainers world, PPC income going down, renewal rates going up and you are going to see more dropping domains.
In the general economy people are looking to raise cash.
You are also going to see good domains sold at reasonable prices by non-domainers and domainers alike.
However I do not think you are going to built a portfilio like Frank or Kevin.
Many of us who got in the business early got many of our domains for registration fees before the drops became auctions. Those days are gone. Any decent domain is going to be priced in the hundred and good
domains are going to be 4 and 5 figures in the drop.
You also are US based like us, so your never going to build a portfolio like Frank or Kevin because you, like us, are at a huge disadvantage tax wise.
I will blog about this at some point, but those guys can reinvest 100% of their revenues to acquire additional domains. US guys have a thing called taxes which takes a lot of the money you could use to reinvest in more domains, and give it to the government.
How does Kevin have a tax advantage? Canadian taxes are steep.
Mike,
Thanks for that post. That’s what I thought too regarding how much more difficult it is now to acquire good domains vs 1997 and 2002. Not saying that it’s not possible, just saying I don’t see how today is just as good or better an opportunity than back then. That’s just not possible. And I agree about the taxes, but that’s also something that’s a constant now and back then.
However, if a domainer has a new killer app/idea like a Youtube or Facebook, the opportunity to go from zero to billionaire can be done within a couple of years. But that’s always the case no matter if it’s now or 5 yrs ago or 5 years from now.
If there is a new domainer juggernaut(s) to emerge from this era, it would have to be done completely different from Kevin Ham or Frank Schilling who both did it differently from Rick Schwartz. Their tactics don’t work as well today as back then simply because they are not taking anyone by surprise or operating under the radar so to speak. I was hoping Rick had some insight into what that new kind of “domaining” that would be.
Andrew
As far as I know all of hit farms domains are offshore in a no tax jurisdiction
Mike,
Similar realty market here in SoCal…most residential properties have; and continue; to tank…but, those high-end estates priced 5 million+ have seen very few foreclosures, little or no change in time on market, and steady sales prices.
The rich/super rich want what they want, and have the money to get it.
Steve
I got some more detailed info on these houses that sold.
Many had been on the market for upwards of a year, but they dropped the price and the buyers came out really since May 1.
In a little over a month since May 1 they sold more units and more volume that they had from Jan1-April 30
Tony,
What worked then, won’t work now. You can’t go back in time. It was a different set of circumstances. So you can’t keep drilling in the same hole looking for oil that has been pumped out long ago. You have to be forward thinking. Looking for opportunity in front of you not the opportunity behind you.
You could have just as easily been Frank Schilling in 2001 when he entered the business. The domainers back then believed all the great domains were snapped up by folks like me and none were left. Frank forgot to listen to their bullshit and accomplished what they believed could not be done. So success has little to do with the economy and much more to do with a state of mind.
People talk about the weak dollar and nobody wants dollars. I say that is nonsense. If people had the dollars, you would not be seeing all these foreclosures. The dollar may be weak, but it is also scarce. So that forces folks to sell assets they ordinarily would not sell. They have to take out their best stuff, whether it be domains, cars, boats, condos, etc. They have to find the stuff that will sell in a market that does not want to buy anything and then price it so aggressively that it forces somebody with dollars to come to the surface and buy it anyway.
What happens is at some point the folks with the dollars come off the sidelines and start snapping things up a GREAT bargains. So those that saw this coming and saved up for it, are in a very aggressive mode and those that have been short of cash are in a protective mode. Many are holding on for dear life. The more desperate they get, the more opportunity will be brought to market. That is why I am making the most out of this downturn. Most are in a wait and see and are paralyzed. I see opportunity and want to be in the game. More importantly, I have not limited myself to just domain names. I am looking at all sorts of deals on the net and off. Opportunity comes in many shapes and forms and it is important to be open to diversification IF the deal is right.
JMO
Rick,
Thank you for your time and insight. Your voice is very much missed in the blogging community.