Mediterranean Avenue for Boardwalk Prices…

I think I am about over real estate investors walking around dumbfounded as to why real estate prices came back down. As a good friend of mine says (and I mean no disrespect) “Ray Charles could see that one coming.”

You remember the game Monopoly? The game tends to serve as a great example when describing various situations in real life.  

As I am sure you may remember, one of the first properties after “Go” was Mediterranean Avenue. No one really ever wanted Mediterranean Avenue – you could tell because of all the properties on the board it was the cheapest to purchase. 

Mediterranean Avenue sold for $60. Conversely Boardwalk sold for $400. If you landed on either property and it was owned by someone you paid “rent.” It should be no surprise the price to stay at Boardwalk was considerably higher – especially if someone erected a Trump Hotel or a couple houses. 

Boardwalk was more expensive than Mediterranean Avenue because, I guess, they were different sides of the tracks (or at least on different sides of “Go”). No matter how you cut it, Boardwalk was a nice villa with water fountains in the front yard and Mediterranean Avenue had a ’73 Chevy Nova on blocks sitting in the front. 

If you were a buyer you wouldn’t pay the same for Mediterranean Avenue as you would for Boardwalk – you would never make your money back. You would simply meander around the board until you ran out of money or ended up in jail. 

The same held true over the last couple years as “real” real estate went higher and higher. If you paid Boardwalk prices for a house located next to Mediterranean Avenue – you paid too much. 

Hey, I don’t like it anymore than anyone else does that houses came down in price – but I can’t say I am “surprised” when they went up as fast as they did. Isn’t there some gravity thing like “what goes up must come…?)

If you aren’t familiar with the phrase let’s play Monopoly sometime…