Memorial Day has also come to serve as an unofficial start to summer with camps for the kids, family vacations, going to the beach and cookouts. And as summer begins, I can’t help but think that at Avalon Park Group I sometimes wish we could just take off for a month, enjoy the summer, not look at e-mails, and have no meetings or deadlines. Then I reminded of something that one of my closest business partners and friends said. He said that at APG we are often more concerned about planning for what could go wrong, than celebrating our many victories, and I had to
agree. So, as we move into the summer, we will be cautious, but we will also be focusing on celebrating victories of all sizes.
As many are making plans for the summer by filling up the car with gas or buying a plane ticket, they are feeling it in their wallets. And as a result the question that I keep hearing asked to myself and others is, “Are we headed for a recession?”
The last severe recession was back in 2008, and it was catastrophic for the real estate industry and millions of homeowners lost their houses to foreclosure. Countless companies went under, household brands in finance and banking like Washington Mutual, Colonial Bank and ING closed their doors for good. And in the real estate industry homebuilders like Levitt Homes, Mercedes Homes and many others went bankrupt.
Right now, in many places people sound as though a recession is already here. Yet, so far, what people say and what people do seem to be two different things. On OpenTable restaurant bookings are still above the pre-pandemic norm, America’s retail sales are still increasing, and hotel occupancy continues to improve. Additionally, 65% of low-income families’ bank accounts have higher balances then they did at the end of 2019. It looks as though consumers are likely able to continue spending for a while.
Sometimes I play to our management team the song “The Gambler” from Kenny Rogers: “You got to know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.”
Do I believe that we are back in 2005 when I wrote in this paper the column “Homebuyer Beware” and found it “was time to run” from the housing market? Is this the reason we sold our homebuilding company 6 months ago? And are otherwise selling some of our real estate assets? I admit in that in part the economic climate feels like this, however, I also believe that 2022 is different than the great recession which started in 2007. While worries are certainly mounting, and I advise you to prepare for a downturn, at APG we are cautiously continuing to move ahead with our long-term plans.
As we did in 2007, we never stopped building, and we will not do so now. We just signed a contract to build a 3-story mixed-use building, which will have a Marketplace food hall and The 5th Floor co-working space in Avalon Park Wesley Chapel. Additionally, lot development continues in Avalon Park Tavares and our Texas operations. These are all victories we will kick this summer off celebrating! While we will be mindful of a likely downturn, we will proceed, but proceed with caution.
So, while we continue to keep a close eye on the economy, we are also encouraging you to enjoy the summer and celebrate the victories.
Have a great summer!