Archive for January, 2009
The Enemy Becomes An Ally? With Change There Is HOPE!
January 19th, 2009 Categories: Real Estate News
The credit market has been the biggest enemy to real estate over the last several years. However the credit market appears to be on the verge of becoming stable and this bodes well for real estate.
Banks continue to drag their feet in making mortgage loans but this too is starting to unwind with continued prodding from the Treasury Department and the Federal Reserve.
Billions have been poured into the system to make this happened which presents some interesting thoughts.
The media has written a great deal of high profile private market scams created and its impact on many people. Prosecutors do their thing in having these people jailed or under house arrest until their trial. There is portrayed the sense of injustice (which there is).
There is however little mention of public (government) mismanagement of the same ilk created by Congress (Mr. Dodd and Mr. Frank) with their concept of a “house in every pot”.
Scant media coverage has been directed to the government vehicle created to implement the process for this political fiasco…..Freddie Mac and Fannie Mae.
One would think that the various control mechanisms in place (prosecutors) would take steps to find out and punish those that created this mess. But those in charge of the controls are politically connected to the policy makers…..its a political society that does what it wants at any cost to the taxpayer, at any time, without fear or any accountability.
Who is to blame? The citizens. We are not vocal enough to right a wrong when it is made. We look the other way far too often. We play a part in the charade. We Have Lost Our Compass/
What is the cost of this Government (real estate) mismanagement to Ventura County? Sizable. Here is a rough idea of cost.
Over the last two years Ventura County has lost approximately $ 1.5 BILLION in home values (and this is a very conservative number). Multiply this by the number of Counties in California and then multiply by the other States/Counties and you have the cost of the political real estate fiasco fostered on us by Congress marshalled by Dodd and Frank just over a two year period. And now they head the committees that will legislate policy to get us out of this quagmire.
Things come in three’s so they say. After the waters settle expect double digit mortgage rates. Sooner or later this infusion of money has to be paid .
In the article hit-the-reset-button/ it was noted that it appears to be open season and money will flow. If anything gets done will be a miracle because there are no steps for accountability.
Schadenfreude. According to the dictionary “schadenfreude” is defined as the pleasurable emotion resulting from the misfortunes of others”.
When I first saw this term I thought it was a stretch until I started to think of the news and other media sources. And the term applies. Watching or listening there is the under tones of ’schadenfreude” in play. It has been quite evident during the credit down turn. But taking the people who created the problem to task has been mute.
Our news media both print and visual is a theater. There is no insightful investigation into problems or suggestions as to how to resolve these problems. Other avenues will fill the void (Internet?) maybe.
There is hope President Obama will resolve our problems. Some believe that he is going to end their mortgage payments, increase their income, and make everyone equal. That is not going to occur.
If he is treated with the disrespect and acrimony given President Bush by both Congress and the media we will face continued pickering and more of the same.
Let’s hope President Obama is given a chance. He is taking on a task that very few would undertake willingly.
We are faced with excessive government and its take over of major institutions. Russia and Venezuela are examples of what can occur. Once government senses its overall powers nothing will be left out. Governments have ravenous appetites to the detriment of its citizens.
To be sure President Obama best measures will not control the greed which will become grander with the willy-nelle released of monies without accountability. But he will do his best as a person as do all Presidents who have held that office.
Comments are welcomed.
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How To Get A Human On The Line
January 10th, 2009 Categories: Neighbor Helping Neighbor
It is frustrating when you call a business and have to go through a barrage of actions to get a human on the line. Listed below are actions to take when calling these businesses and you want to talk to a human.
- Amazon.com: 800 201 7575, don’t press or say anything.
- Cablevision: 800 868 9840, press 1, then 0 at each subsequent prompt.
- Capitol One: 800548 4593, press 0
- Dish Network: 800 333 3474, press 0 at each prompt, ignoring messages.
- Equifax: 866 640 2273, press 3 at each prompt, ignoring messages.
- Macy’s Credit: 800 280 4356, press 9 then press 0 at each prompt thereafter,
- MasterCard: 800 622 7747, press 000 at each prompt, ignoring messages.
- NetFlix: 888 638 3549, press 0 at each prompt.
- Nordstrom: 888 282 6060, this number goes directly to the operator.
- Overstock.com: 800 843 2446, press 0 at each prompt, ignoring messages.
- Petco: 888 824 7257, don’t press or say anything.
- Wal-Mart.com: 800 966 6546, press 5 to speak to a customer service rep.
- White House: 202 456 1414, this number goes directly to an operator.
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Digging In.
January 4th, 2009 Categories: Weekly Real Estate Activity In Ventura County
OK. Now what are we doing? You don’t know? Well I am packed and ready to go. Just let me know.
The “bail out” line gets longer. Every type of business imaginable is now asking for federal help. OK, I am jealous because I didn’t get in line .
That $ 600 incentive that most Americans received last year is chump change compared to what banks, investment houses, auto manufacturer, etc., are getting.
What is galling is that banks used part of the bail out money for year end pay incentives to their executives (I thought I had read that $ 1 billion was paid out as incentives to bank and investment executives. That is really rubbing salt into the wound).
Add to the mix now are our 50 States. At last count States have asked for a total of $ 1 Trillion to help them through their economic mess. By all estimates this is a low number. Heck it has to be low. Why California can spend a trillion dollars in a day and not bat an eye doing it. In fact the Sacramento people will holler that isn’t enough.
I think this States action is the other shoe dropping. In a previous article Waiting For The Next Shoe To Drop it was pointed out that Government will tax until people get fed up with taxes and make drastic political changes. We haven’t gotten there yet but we will shortly.
The next group to add to the “bail out” line will individual cities and towns and who knows when it will stop.
Consumers have dug in. Spending it is said will be minimal for durable goods and the like. The reason is simple. Consumers know that they will be facing tax increases at every level, food price increases, durable goods price increases, gasoline prices will start increasing, tax will be assess on the number of miles an individual drives.
So it is not that consumers aren’t spending. Their money is being redirected to tax, tax, tax, tax, fees, fees, fees, fees, and rate increases for sewer, water, electricity and the list goes on and up.
There is only so much money to go around. And unlike our institutions Mr. and Mrs. Main Street cannot get bail out money.
There is talk that savings are beginning to increase so do not be surprise if someone comes up with the idea of taxing savings. Oh…..they do that already. What ever interest one earns is taxed.
Where has all of the money gone? No one has an answer and no one is interested (so it appears).
Spend and tax big time is the model that has been set and it appears there are no (or limited) hooks or explanation required as to how bail out funds received were spent. Now that is an ideal situation.
We do need an upgraded infra-structure (roadways, bridges and the like) but we also need to manage the funds and that isn’t going to happen.
Getting a mortgage loans continues to be difficult. The Federal Reserve has once again admonished banks and publicly reminded them that their business is to make loans.
That isn’t happening. Banks are more interested in acquistions than making loans. Read my related article Quiet Before The Storm / for additional Federal Reserve thoughts on the topic.
Is it possible that we need a new vehicle for consumer/mortgage type loans? Banks have other interest and they are not consumer interest.
The general real estate market is changing. Homes will be getting smaller. Mega-mansions are now and will continue to have difficulties getting approved.
Those with connections may be successful but in general mega-mansions have seen their day for now.
Tract homes will be closer and it appears that most entities will be mixed with a combination of homes, small stores and some park type areas. Planning departments are going to squeeze as much as possible into small areas, creating bigger tax revenue streams for respective communities.
So small and tight fitting may be on the horizon for most new home buyers.
Ventura County Real Estate.
The “jack in the box” spring is being set. Listings in the County are down; sales continue upward but most of these are due to foreclosures which is good that these properties are now off the market.
Foreclosures certainly have put a dent in neighborhood values, exacerbated by banks and appraisers continuing to low ball property values.
Ventura pricing is now at the year 2003-2004 levels. This appears to be close to the bottom. Time will tell.
As noted in my article Out With The Old. In With The New. real estate in Ventura County will start heading upward. It is estimated that Ventura County as a whole will appreciate about 8.4% in 2009. Referring to the article other areas of California will do well except for Los Angeles which will appreciate some but not as strongly as other areas.
All in all Ventura County and real estate in general will weather the economic storms far better than other investments.
Your comments are welcomed.
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Out With The Old; In With The New.
January 3rd, 2009 Categories: National and Local Real Estate Appreciation Forecast
Some areas of Ventura County really took it on the chin in 2008, especially the last quarter of the year.
Ventura Beach properties did remarkedly well in the year 2008 (appreciating about 12%); all other Ventura County areas were hit with a -12% to -57% decrease in property value.
Fillmore was hit extremely hard with a -57.2% (yes that is a negative sign) decrease in values between the period of year 2007 and the end of 2008. Why?
Ojai/Oak View, Santa Paula, parts of Oxnard and of course Fillmore have had high foreclosures and lending institutions and appraisers have been low balling values in these communites for quite some time. Lenders perceive these areas as too risky.
Not all was bad. As noted in the following chart over the course of the last 15 years Ventura County has done well in maintaining property values. Over this time span Ventura County has enjoyed approximately a 10% annual growth in property values.
Even with the sharp declines witnessed during 2008, prices today resemble prices in the County for the years of 2003 and 2004 (which ranged in the $ 460,000+ to $ 579,000 price area). As noted on the chart there were three years of 25% appreciation in the County before signs of an adjustment starting to take place (starting in 2005).
What is in store for the County in 2009? As noted in the first chart above Ventura County will have an appreciation rate increase of about 8% ending in the year 2009.
This estimate is based on 3rd quarter, 2008 information issued from the Office Of Housing, Washington, D.C. Yes there will be some adustments when the 4th quarter information is released but the change should be insignificant.
Should unemployement exceed 10-11% in the County and job creation is zero or negative then there will be a significant impact to the numbers. But it is not expected that unemployement will reach 11%.
Noted in the graph below is the expected growth for the County into the year 2022. The year 2009 should be a good year.
After that just watch out. In 2020+ prices will exceed prices set in the 2005-2006 time frame. Gads! If I can live to 2020+ and see if all of this really happens will be great but the numbers suggest that the Ventura area will start an upswing with a vengence around 2014. Prices in 2020+ will probably double the 2005-2007 prices we have just witness. So hang on it is going to be a great market.
For those of you interested in areas outside the State of California or other California sectors the next table shows the expected price appreciation for these areas. So if you are an investor prepare yourself for some good investment opportunities starting in 2009.
Outside of the State of California, Boston, Detroit, Phoenix and Reno look like they may be good investment areas.
But……invest in areas where you would like to live. Who knows….circumstances may change and you may see yourself having to live in Boston or Detroit.
One of my tenets for investing is to invest in areas that I might have to live in and the second part to that is to buy only NEW anything. I do not want to inherit somebody else’s problems. By buying new I know that the problem didn’t exist before and while that may be some consolation (for me) I recognize that whatever the problem may be the correction, cost wise should be minimal (I hope).
Directing attention to areas in California. Chico, San Luis Obispo, Santa Barbara and of course Ventura County appear to be good places to invest. The problem I see in these areas will be “can one break even monthly” or will they be faced with a negative monthly cash flow.
Again one has to take pencil to paper and figure it all out. What looks golden to one may be a rotten egg to another.
Your comments are welcomed.
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We’ve Lost Our Compass.
January 1st, 2009 Categories: Neighbor Helping Neighbor
Today is the first of the year and I am sitting here musing and like many trying to figure out what went wrong with the year 2008.
It then came to me that we have lost our bearings.
Our problems are decades old and as citizens we have become complacent with the goings on especially when it comes to our institutions.
It is certainly an unraveling feeling when one realizes that the political world has become a haven for the inept. It appears to be a “good old boy network” where connections are more important than doing the work and seeing to the needs of U. S. citizens.
2008 simply has shown that we have been screwing things up for quite some time and we have been taught some lessons with more to come.
Citizens are beginning to recognize that there are only a few people who control and manage the U.S. economy. And these people take actions for political and connection purposes rather than improving and expanding this country’s ideals and enriching individuals.
The citizendry may be wishing and looking forward to a redistribution of wealth in this country. When people think they will get something for free they lose their bearings and it becomes a fetish of “I want more” without consequences. Unfortunately when redistribution is tried the wealthy get wealthier and the poor get poorer. The middle class shrinks.
Many wish not to recognize that our basic institutions have failed US citizens. Be it the Courts, Credit and Bank Institutions, Congressional System or whatever other system you wish to add, they have failed us. These institutions are proving to be as greedy or greedier than the private sector. Again we all saw this for decades but chose to ignore it because it did not impact “me”. If things that we hear and see today were undertaken in the private sector most if not all of the people would be dismissed.
Enron can be viewed as a poster model of excellence when compared to the United States House and Senate and various State legislative bodies. We as a people have placed low expectations on our selves and have become willing accomplices in institutional, governmental and political mediocrity. Illinois and Nevada are examples of how politics works.
Today many think that Government is the savior and willingly give their souls to have government bail them out. There is a thought process that no one can fail and any number of excuses are created to justify government institutionalization of our commerce.
The impact is all around us. It is evident in the government sponsored real estate market started in the 1990’s (a house in every pot).
The associated credit impact we now experience is due to government mis-management.
And the elected people in government who created this mess, now are charged with creating legislation to increase and hold their government flight of fancy. And the United States citizens accept this garbage without complaint. We have put the fox in charge of protecting the chickens.
Recently I heard a “learned professor” outline the great economy of Cuba. People in Cuba are waiting for their government to make them well off. Well nothing constructive has occurred in Cuba for 50 or more years (because, in his opinion, of the United States stand against Castro). It should come as no surprise that it will be another 50 or more years before the Cubans recognize that their government won’t do anything for them.
Venezuela was another great country he suggested that we emulate. I recall my mother telling me that at times “learned people seemingly become so smart that they end up sounding, looking and acting like the stupidest people in the world”.
This “learned individual” also noted how great the health care system was in Canada and suggested that we copy their system. Well from what I hear one has to wait months if not years for an operations in Canada. It is no mystery that Canadians come to the United States for critical operations. So it is beyond me what Canada can offer in the health care system.
In California I recently read of an individual who felt that more money had to be directed to the school system. 60% of this States budget plus how much more from the lottery goes to education. If education were given 100% of the States budget it still would not be enough and the system would remain inferior.
In the 1960’s and 1970’s US Custom agents were being prematurely retired because they would do the right thing and round up illegals. However meat packing plant owners and farmers/ranchers would contact their Congressman or Senator and tell them to stop the raids on their establishments. The Custom agent would then be reassigned or retired to pacify these business and political entities. Today we still have illegals and no one really cares. In many communities there is still the wink, wink when it comes to this problem.
My dad was born in Switzerland; my mother in Ireland. I recall my dad telling me of the hurdles that he had to go through to get into this country. He was 16 when he arrived here and at that time he needed to prove that he had a job and $ 100 in his pocket plus all of the other procedural items to become a citizen.
But he as well as my mother did what they had to do to become citizens. It was their aspiration to do well in this country. Dad spoke German and his English was limited but he focused on learning English. My mother passed away when I was young but my step-mother was German and both parents made it a point that they would speak English to the kids. It was the thing to do in their new home land.
This drive by my parents to become citizens of the United States isn’t as readily evident today by people who come to this country today (often illegally). Today it’s the thing to use our Country simply to get money to send home to their own country. Illegals do not want to become citizens and have been schooled to think they have a right to use our resources in order to better themselves and family’s in their own land. We’ve done a flip-flop.
As a people we are complacent and have allowed ourselves to be used. Recently I read where Gale Sayers (I think it was he) wrote in his book that he kept his perspective by recognizing that there was a God, there were others that he had to serve and then their was him.
Today people see only themselves. There is no God and no others. Yes our children will inherit a great debt but we also leave them the worse of ethics and morals that one generation can give to another.
It was not long ago that a persons word meant something. A handshake was a contract. Today even if written, contracts are challenged as being no contracts. Our legal system and the people who work and use this system have change the rules so that in effect there are no rules.
Connections now are the key to getting things done and at what cost? Re-visit the real estate and mortgage markets and you have an introduction to connections.
Your comments are welcomed.
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