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.
