Housing Crisis Now Worse Than The Great Depression

Prices have fallen 33%, more than the 31% they fell during the Great Depression. If you are in the real estate business, you know the pain all too well.

Read more here

http://www.cnbc.com//id/43395857

The New Renter Wants Something Different

“Changes in renter demographics, pent-up apartment demand and an improving economy have experts predicting and preparing for a major period of development, perhaps akin to the suburban apartment boom of 1969 to 1973, when monthly multifamily startups hit the 1 million mark.”

Read more here

http://www.multihousingnews.com/features/development/necessities-of-the-next-development-boom/?utm_source=WhatCountsEmail&utm_medium=Daily%20News&utm_campaign=Daily

Double Dip Worse than Expected?

It is always darkest just before the light.  The housing market will begin to turn up in 12-18 months, but not before more bad news.

“U.S. single-family home prices dropped in March, dipping below their 2009 low, as the housing market remained bogged down by inventory and weak demand, a closely watched survey said Tuesday.”

 Read more here    http://www.cnbc.com/id/43222783

When will it end?

It seems every time I read a news piece about the real estate market it’s always the same conclusion, prices continue to fall.  This song has been played out for 4 years now!  Is there any end in sight?  Interest rates are at an all time low and in some markets the affordability ratio has never been better.  So why then aren’t houses selling like crazy?  It’s a combination of factors.  People have gotten to the point that they expect prices to fall creating a standoff between buyers and sellers.  So prices fall, people wait to purchase, prices fall further, and a negative feedback loop is in place.  It’s a tough cycle to stop.  Another reason is financing.  Just as financing was too loose at the top, now it is too tight.  The pendulum always swings too far to the extremes.  Lastly, 8% of the population is out of work and this is what I believe to be the strongest factor in the lagging real estate recovery.   In the 1990′s , housing prices didn’t start rising again until 1994 and by that time, unemployment had dropped to 6%.  If we use that experience as a road map for where we are going, a recovery could still be a couple of years off.

How to sell a house today.

To sell a house today, you need to be the best priced house, in the best location, and then expect an offer.  With so much competition out there, making your house memorable and unique is vital to getting that offer.

So, here is exactly what you do. 

1.  Hire a professional stager!  Even if your house is professionally decorated to start with, do it anyway…it’s that important!

2.  Get professional pictures taken!  Today, people search online for the house they want to buy, and if your house presents well online, it will sell faster!

3.  Set your house apart online.  I like using a zingding, www.zingding.com to stand out.  This puts music to a side-show of your house and gets people emotionally invested in it!

Remember, sex sells with everything!  And when marketing online, making something stand out and sexy is more important than ever.

REO’s are like Rotting Fruit

The bulk REO market has been going around like a game of musical chairs and now they are being left without a seat.  For the past couple years, investors have been buying large blocks of REOs from banks with the hopes of reselling them to other investors.  That strategy has worked for a time, but now investors have been satiated with product and a number of people are stuck with low-end properties with no real strategy of selling them. 

The major problem with these houses is they are like rotting fruit.  That is every day they sit vacant, they are worth less and less.  The houses get vandalised, squatters move in, the houses get fined by cities for un-mowed yards or snow on the sidewalks, and the worst is that they get demolished for being uninhabitable.  Banks are starting to understand how bad it is to have vacant houses sitting there and are beginning to be more aggressive about moving them, which will push the market down even further.

Investors that have houses need to get them sold as soon as they can.  Each day that passes the investors incur carrying costs and the risk of diminished value in their investment from vandals, as well as being subject to the market swings. 

If you have houses or know of someone who has gotten stuck with REOs, check out my website www.nobankhouse.com .   I can help you out as well, just send me a note.

Come On Mr. President, Make Me Feel Good!

As a small business owner, I know I speak for the bulk of small business owners around the country with my comments, and my suggestions.

There is one simple way to get us out of the economy.  We need a “Gipper” speech from our leader  like the one given to the 1980 USA hockey team in Miracle on Ice) http://www.youtube.com/watch?v=vwpTj_Z9v-c   one that is impassioned, inspiring and downright motivating.  We need the President to tell us that he believes in us and wants us to win and will do whatever it takes for us to make money…..LOTS of money! 

Right now every time the President speaks, I feel like he has me in his crosshairs and that I am bad for trying to make money.  This makes me fearfull and not willing to take risks, hire new people, consume goods, and the result is the economy keeps on lagging.  The President attacks high income earners like they are bad people, not the huge benefit to our economy that they are.  Shouldn’t he be our biggest cheerleader?  Wouldn’t it be better if he gave a motivational speech saying how much he cared for us, how much we’re all in this together and how we are the chosen ones to pull us out of this mess?   Freedom and the ability to elevate our economic standing are backbones to Entrepreneurship so come on, throw gas on that fire!

He is like the coach getting mad at Michael Jordan for wanting to take the last shot to try and win the game.  Get real, he’s your best player!  “Look team, we all know who got us here, now it’s on him to take us to the promised land!  Everyone does what your supposed to do and we win, now go make it happen!”

I hope the President changes his tune, gains the respect of the people who can do the most to heal the sluggish economy, and come up with the greatest motivational speech ever!  Only when he gets on the side of business will he have more leverage to raise taxes, pay down the debt and get the economy going.  Come on Mr. President, inspire me!

Capitulation! Is it here?

Capitulation occurs when the sellers finally throw in the towel and sell at the market, “I’ve had enough!”  Right now,  I am seeing a number of banks take that exact approach.  They are selling their REO properties that they have had on their books for a long time for whatever they can get.  Couple that with banks that are going out of business, and the aggressiveness with which the acquiring banks are disposing of those toxic assets, it definitely feels like the bottom is near.  The good buys are now getting great.

When banks get aggressive with their selling, they set the new floor for the market.    They now force everyone else to sell at this new, lower market.  The banks that can’t sell because of reserve amounts and capital requirements just sit there until they get taken over, I call them the walking dead.  When the new bank takes them over, they immediately liquidate their REO for whatever they can get.  They say “it’s business as usual” but with the FDIC back stopping 80% of the loss, they just want out.  

The capitulation point is a little like the flushing of a toilet.  With one stroke of the handle, the entire market goes down, and then and only then can it fill back up. I hope this is it, this market has felt a little like a sailboat with no wind, drifting aimlessly with the currents.

Sex Sells! Even in real estate!

There is no disputing the fact that people are attracted to beautiful things.  Think about it, the models in magazines are all beautiful, you lust after the car that “looks cool”, and you want to live in the house that you fall in love with from the street. 

“Sex sells” applies to everything, even to real estate, and I have been reminded of that fact in this difficult market.  Occasionally, a foreclosure comes through our office that we fix up and sell.  In this market you have to make the house stand out and be memorable.  In the house we bought, we did the usual-paint, carpet, counters, but what really made the difference is when we decided to fully furnish the house!  It sold…. and it sold fast!   They say a picture is worth a thousand words, and when you furnish a vacant home, you are creating that picture for the buyers.  Think of it as a painted picture versus a blank canvas….a big difference.  In furnishing your vacant homes, you are creating something memorable, something that sticks in your buyers memory and will lead to more sales.  

Remember, we are attracted to things that are easy to look at and easy for our brains to make sense of, and in this market, you need to make it as easy as you can for buyers to visualize the home they are buying.

Why the Banking crisis will effect new business creation for some time to come, by George Hale

Extend and pretend is the name of the game with the banks http://online.wsj.com/article/SB10001424052748704764404575286882690834088.html?mod=ITP_pageone_0.  If they have a bad loan on their books, they would rather extend the loan and reduce interest so that the current borrower can make payments and so the bank doesn’t have to take the property back and take a loss.  This is like the girlfriend with the annoying habit.  At first, you just overlook it, but as you date her more often, the annoying habit cannot be overlooked.    Same is true  with the banks, and sooner or later they will need to purge their portfolios of all the garbage that has accumulated there.

The problem is there are so many banks with assets that are so far underwater, that to sell their assets would put them out of business.  So doing nothing and waiting for either the market to go back up, or to be taken over is their only option.  Even with the FDIC guaranteeing most of the losses, it takes a lot of time and energy for the new bank to work through all the problems when they take another bank over.  Now the FDIC is having trouble finding suitors willing to take on the challenge of a new bank.  So what is going to happen?  The Government should resurrect the RTC, pool all the bad loans, and dispose of them.  This  would be highly painful, but it would be like ripping the band-aid off quick instead of the slow torture going on now.

Until this happens, new loans to consumers and businesses will be next to nothing.  Most banks have so many problems that they have no capital to loan, and the ones that do have capital are too scared to put it out.  Until we fix these problems, unemployment will stay high and the real estate market will stay under pressure.  It’s starting to look  a lot  like Japan.