If you’ve been around the real estate world in San Antonio for very long, you’ve more than likely heard the name Richard Dugger. He’s seen the good and the bad…namely as a real estate appraiser. Dugger’s career notably began at Love and Dugger, a firm that emerged in the 70s and has gone through several partners and firm name changes – today, being known as Valbridge Property Advisors | San Antonio. In speaking with Mr. Dugger about what he has seen throughout his 50-plus years as a real estate professional, he laughingly concludes that with each reference, he’s really revealing his age.
“Real estate appraisers are responsible for analyzing the market. It is a lot harder to appraise in a “down” market than in an “up” market, says Richard. We’ve had crisis situations before – each one having its own personality, if you will, but affecting the population all the same. There are many different types of crisis’: economic, cultural/social, and health that ultimately can result in an economic crisis.” Today, we are more aware and informed of the situation than people have been in the past, but the challenges and results aren’t all that different. What is unique about each crisis is that we don’t know what the outcome will be, how long it will last, or how long the results (negative or positive) will linger.
As has been said many times before – this is not “our first rodeo”. If you think back to historical events that have rocked the economy, Dugger remembers being a child during the polio crisis and the self-quarantining that he endured for several years so that he wasn’t unnecessarily exposed to unhealthy peers. It meant some lonely birthday parties for a time. You may recall the Kennedy assassination, the Kent State shootings, the AIDS crisis, 9/11, and ones closer to home like the oil embargo of 1970s. Each of these situations was disruptive and/or horrific, yet they unified our country in one way or the other – even if for only a short time.
Oil & Gas
As we watched the West Texas Intermediate (WTI) numbers crumble recently, with oil trading below $20, many of us in Texas, Oklahoma and Louisiana especially, remember the collapse of the banking, real estate and oil & gas industries. That fall-out lasted 4-5 years regionally, followed by ups and downs resulting from the tech boom and bust and the ‘08 recession. Starting in 2010, Texas was able to recover quicker than other regions because of the Eagle Ford Shale and Permian Basin exploration. Since then, oil & gas has been a “driver” in our state’s economic boom.
From a real estate appraisal firm perspective, Dugger recalls the 70s and 80s when the firm was extremely busy during the first part of that crisis-busier than they had ever been before. Financial institutions were asking for appraisals to be updated in a very timely manner, every 6 months at a minimum. Every bank wanted to know where they stood with regard to their collateralized assets. After the many banks failed and virtually all the Savings and Loans failed (over 20 in San Antonio), the appraisal business became very slow. The banks knew the answer…properties on their books weren’t very valuable. Circa 1992, businesses had been through years of a depressed economy and properties had been foreclosed or sold at auction with loans written down significantly. This downturn lasted several years, and most appraisal firms’ income was reduced substantially. The number of appraisal firms also decreased and firms like Love and Dugger got very “lean”, cutting expenses and reducing staff. This will likely happen a time or two during the life of a professional firm.
Dugger admits he has never seen businesses like malls, hotels and restaurants shut down like they are today, anecdotally noting that he drove past the Quarry Market and saw nothing but a large, empty parking lot. Based on his experience, then and now, Richard expects that rent forgiveness will be required by many tenants; the recovery will likely be sluggish. With regard to the appraisal business, it could go one of two ways: a slowdown in appraisal assignments for industries like hospitality (many hotels are currently closed) and mortgage work being slow. However, he does concede that estate planning, condemnation and consulting will continue. Conversely, he admits that lenders with commercial properties on their books may require a large number of appraisals so that they can assess the value in today’s market. A lot may depend on how the government reacts. Will they subsidize industries like aviation and agriculture? Or will this become a story of survival of the fittest? The Federal and State government has a big impact on our current crisis – whether they are contributing to the crisis or aiding in its recovery.
The results from all of these crisis’ means that our daily lives and culture have and will change as we move forward. People will likely ease back into daily life but will probably not “jump” back. They may be a bit more standoffish from others and certain businesses in the beginning and be “guarded” and conservative. So many families just won’t have the funds to “get back in the swing of things”– even when businesses do fully open.
Regardless, Richard Dugger says, “The sun will still come up tomorrow and birds will still fly…if you’ve lived awhile, this is not your first crisis and probably won’t be your last. The appraisal business and real estate have been very good to me over the long run. I wouldn’t want to be in any other profession.”