I had a spirited chat with a friend this week about a house in Atlanta that just hit the market. We debated how long it will take to sell. I think it will sell within a week, and my friend thinks it will take a few months. Surprised, I dug into his why. He things it’s overpriced and that a price reduction will be needed to move it after it sits unsold for a few weeks. I think the price is fair. The true disconnect is what we think the house is worth.

After more back and forth, I got to the root of our disagreement. I’m bullish on Atlanta. I think the city offers qualities other major metros can’t that make it a place people see themselves settling down in and calling home for the long term. And pandemic dynamics contribute to it being a desirable destination. Home prices reflect this and are likely to continue increasing for the foreseeable future. I believe that prices are fair relative to where they’ll be in the future.

My friend has lived in Atlanta for a long time. He remembers a glut of houses on the market after the financial crisis and some now-trendy neighborhoods being seedy. He believes Atlanta is in a real estate bubble and prices will drop at some point. In other words, he believes current prices are inflated relative to historical prices.

As I reflected on our conversation, I realized that we had different perspectives: I was focused on the future, and he was focused on the past.

Looking at an opportunity, I’m a fan of future thinking. I wasn’t always like this. Flipping this mental switch transformed how I analyze opportunities. I’m able to see opportunity and capitalize on it because I can still see it as “cheap.” If things go as I predict, the asset will increase in value, and I will have gotten a deal at its current price. It’s irrelevant that I didn’t buy at the cheapest historical price, a consideration that I view as a mental trap.