Gloom Doom and Other Positive Signs
January 23rd, 2010
The trouble with gloom and doom is that when you’re surrounded by it, that’s all you can see. While most economists don’t predict a depression, the prevailing thought is that we’re in for a very bad recession with lots more foreclosures, job losses and many personal and business bankruptcies.
I’m not going to express my views about the insanity in Washington regarding the financial market and Detroit’s Big Three bailouts. I will say the new President sure has inherited a mess (some would say it’s a crime scene). His hands are full but I think he’s got the moral support of the general population and I wish him (and all of us) the best. On the bright side, if history teaches us anything it’s that this, too, shall pass. Everything changes, nothing is static. If you don’t like what you’re seeing right now, just wait a minute, it’ll change.
I’ve been telling anybody that’ll listen that it’s time to buy real estate. Great deals are made when the market is in the tank and everyone is trying to sell. In the residential market, the number of home sales is increasing but prices are still flat or falling, although at a much slower pace. This is a sign that we’re at or close to the bottom of the current real estate market cycle. Another sign of a market bottom is to look at who’s buying houses these days, and who are the sellers. In housing it’s mostly investors buying property directly from the banks.
I’ve been getting lots of calls lately from Realtors who know of commercial properties with owners that are in big trouble and need to sell. It’s definitely a buyer’s market and cash is king. We’re always looking for more great deals as we raise capital to make it happen. The market will probably slide along the bottom for all of next year before signs of life become evident, if then. However, until there is liquidity in the lending market, nothing will change. Since banks and other commercial lenders are not making loans these days, owners have become much more willing to hold a mortgage on their property and you can get great terms from a motivated seller.
The bottom line is, there’s lots of blood in the streets, with more to come, but the darkest hour is just before dawn. Sure, the market may languish for a while but when the recession ends and liquidity is restored to the financial markets, real estate prices will begin moving up again. And don’t forget, we’ll be seeing massive inflation in the next year or so. You can’t print dollars like the Fed has in the last couple of months (and will continue to in it’s battle to restore liquidity and end the recession) without increasing inflation. When inflation is on the rise, you’ll want to be in assets that move with inflation, like real estate. Buy at today’s super low prices and watch your wealth grow as inflation does its thing.
Take a look at the market cycle chart in my blog http://dougmitchell123.blospot.com/ to get an idea of where we are in the current real estate cycle and where the market will head as the economy recovers. The cycles usually repeat about every six to ten years, but because of the extent of the mess the economy is in right now, and Congress being clueless about what to do, I think this one will be long in duration. Remember, the time to buy anything is when everyone else selling, whether it’s real estate, stocks, cars, whatever. Those who move against the crowd now will be tomorrow’s millionaires. It happens in every recession and it’s happening again now. You can bet on it.
Doug Mitchel
http://www.articlesbase.com/real-estate-articles/gloom-doom-and-other-positive-signs-695145.html
January 23rd, 2010 at 10:57 am
Why aren’t the Republicans lauding the positive economic signs from the second quarter?
The second quarter of ’09 – in case you forgot, this is the quarter AFTER Bush left office – the economy is showing strong positive signs.
Housing starts up for second straight month;
http://www.dailyfinance.com/2009/07/17/u-s-housing-starts-rise-for-second-straight-month/
Big banks turn massive profits;
http://www.sunherald.com/business/story/1483069.html
Where are all the doom and gloom Republicans now?
Haha, typical doom and gloom responses. And you guys wonder why the Republican party is edging toward oblivion…
January 23rd, 2010 at 3:59 pm
dude, the economy isnt getting better, its just sinking slower…but that has nothing to do with politics, it has to do with the media scaring the shit out of everyone
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January 23rd, 2010 at 4:01 pm
Lmao, you haven’t seen the unemployment numbers have you?
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January 23rd, 2010 at 4:03 pm
When it hits my pocket, I’ll laud until the cows come home.
Until then, its all spin.
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January 23rd, 2010 at 4:05 pm
dude, when the government gives banks billions and they do nothing with it, they will show a profit!
who can afford houses? how many houses on the market are in foreclosure?
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January 23rd, 2010 at 4:07 pm
Probably because the unemployment rate continues to climb above 10%.
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January 23rd, 2010 at 4:09 pm
cherry picking stats is fine but as a whole, you are wrong.
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January 23rd, 2010 at 4:11 pm
Forget the puff pieces put out by the media branch of the democratic party. Do you personally know any one that has lost their job or home to this economy? Are they still in the hole? When people are getting hired, and can pay their bills again, then progress will be made.
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January 23rd, 2010 at 4:13 pm
The economy will right itself sooner or later, regardless what the politicians do. No credit should be given to the President or Congress for any gains.
It’s kinda like plants that lose all their leaves in the fall, look completely dead in the winter, and then new leaves come out in the spring. Sometimes things just happen in a natural course of events.
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January 23rd, 2010 at 4:15 pm
What your seeing is false security brought on by massive spending and the more intelligent companies cutting employees and costs.
Yeah sure it looks good this quarter, but it won’t last. All this spending WILL crush the economy within a decade cause the ammount of money being thrown around (1.25 trillion) will so greatly devalue the dollar that the wee tiny bit if positive income these companies are makeing will seem like pennies on the dollar. This destroying amy reserves these companies have and leading to an economic meltdown and massive lay offs.
Think a little farther ahead than you own pecker. Tomarrow may be pretty, but there is a storm like we have never seen on the horizen.
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January 23rd, 2010 at 4:17 pm
tell that to the 15 states that now have over 10% unemployment and
and to those that lost their home under skyrocketing foreclosure rates!!!
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January 23rd, 2010 at 4:19 pm
Funny, I noticed the same thing. Even though the main Republican McCain himself said Obama is doing a good job,..most conservatives are still too bitter after suffering a crushing defeat to put country over political squabbles.
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January 23rd, 2010 at 4:21 pm
It would kill the Republicans to admit admit that President Obama has done anything positive.
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