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Will the Recovery Go Extra Innings? Are We In for a Hard or Soft Landing? Real Estate Never Met a Cliché It Didn't Love

Sound Familiar? While Many Readers Roll Their Eyes at Economic Adages, Some Purveyors Insist They Have a Purpose
July 10, 2018
Going into extra innings. Credit KellyK

The economy is in the middle innings. Or possibly the late innings. Unless it’s extra innings.

The market may be getting overheated, even frothy, if you will.

Of course, there may be some headwinds. A bubble may be forming. Are we in for a hard or a soft landing? Should investors try to catch a falling knife, or wait until it hits the floor?

Real estate brokers, developers, executives and other observers are challenged in coming up with clever ways to describe where we are in the latest economic cycle. Over the years, the clichés have become shorthand for communicating market conditions.

Frank Nothat, chief economist at CoreLogic, is forecasting that the overall economy will grow 3.3 percent in the next year. He expects the current expansion will last for at least the next year and a half, challenging the longest economic run in history from 1991-2001.

"We’re in the middle innings," said Ken Johnson, an economist and real estate professor at Florida Atlantic University in Boca Raton, FL, referring to the overall economy using the convenient-but-somewhat-tortured baseball analogy. "I’m very optimistic. There’s good jobs. Pay is up. There’s a lot of good economic news."

He’s not as pumped about the commercial real estate market specifically, saying there’s evidence to suggest it’s nearing its peak.

Johnson said he doesn’t trot out clichés when he’s writing an academic paper or chatting with fellow professors and other colleagues. But an occasional expression, tired though it may be, has its place in allowing a lay person to grasp an issue that can be confusing, he said.

"Clichés are very helpful," Johnson insisted. "They really help people make decisions. I see nothing wrong with clichés."

Peter Linneman, principal with Linneman Associates and professor emeritus of real estate at the University of Pennsylvania's Wharton School of Business, has been delivering real estate and economic commentary and forecasts -- along with healthy dollops of analogies to make them palatable and interesting -- for more than three decades.

"Clichés serve a purpose only in the sense that people want to know, 'what does rattlesnake taste like?' Well, like chicken, except a little gamier," Linneman said. "They provide a frame of reference for people that have none. Is it a great frame of reference? Not terribly, but it's better than no frame of reference."

Much like the farming clichés popular during our agrarian past, the chickens have come home to roost on many of today's common comparisons used by economists and real estate analysts. Linneman suspects that baseball analogies in particular may be, well, shopworn.

"The funny thing is, they have really not been modernized. Baseball is no longer the national pastime, especially among younger people," Linneman said. "I can imagine many millennials have never ever stayed 'til the ninth inning, so they wouldn't even know what it means to go extra innings."

Linneman hails from Philadelphia, home of the defending Super Bowl champion Eagles.

"Why does no one say we're one minute away from the two-minute warning? Football is our national game now," he said.

Aviation, boating and weather analogies are other analyst favorites, and many don't mind mixing analogies. Linneman said it's too early to know whether real estate is in for a hard or a soft landing.

But for now, it's clear sailing ahead, so to speak, with relatively balanced supply and demand in housing and commercial property pricing and construction.

"As long as I land intact, I feel fine," he said. "The bigger the excesses, the bumpier the landing and right now, we don't have any notable excesses.

"But big excesses can build up pretty fast, so keep those seatbelts fastened."
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