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Tag Archives: financial crisis

The WRONG Top ten List to be on…

FedEx A310 and A300 cargo aircraft fly daily f...
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Yahoo News recently published an article titled “The Eight States Running Out of Homebuyers“.  (I know, I said 10… they say 8, but they mentioned that Colorado and South Carolina barely missed inclusion).

Georgia ranked #6…

I’ll cut to the chase and give you the list.  Check out the article for the details on each state…

  1. Michigan
  2. Nevada
  3. Arizona
  4. California
  5. Illinois
  6. Georgia
  7. Oregon
  8. Florida
KMMG plant and aerial view
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Georgia made it onto the list because of the following statistics…

  • 2010 Foreclosures: 3.25% (6th Worst)
  • Unemployment: 10% (9th Worst)
  • Decrease in Building Permits 2006-2010: -82.29% (2nd Worst)

Of course, I want to put my spin on these things…

There is no getting around the foreclosures.  As a real estate agent, I see loads of them listed in the local MLS (Multiple Listing Service), as well as properties that are foreclosed, but not yet listed.  I also see the properties that are on their way to foreclosure… short sales, neglected homes, etc.  They are seriously impacting home values across the state.

selfmade image of U.S. Unemployment rate from ...
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Unemployment is the big one.  As employment increases, pressure on the housing market decreases.  Simply put, buyers are reluctant to buy when they aren’t feeling secure in their employment future.  There are some rumblings that could bring an improvement to the employment rate… FedEx is building a new Distribution Center in Norcross (Gwinnett County) that will be bringing a good number of jobs to the area over the next 18 months (it is scheduled to open in Sept. 2012).  While the 200 people that will work in the facility will be largely from other FedEx facilities, there will be jobs from the construction of the 215,000sf facility.  There may be future jobs added as well.  Kia Motors has a production facility in the state that is expanding.  There are other companies, large and small, that are opening or expanding operations in Georgia, as well.

The decrease in building permits is another matter entirely.  I see it as a backward looking indicator.  I also see a decrease in construction starts as positive news for inventory already on the market.  And in the last couple of years, we have seen the inventories decrease by half…  If there is already an over-supply, more building won’t help that.  And we have an oversupply.

The bottom line, for me, is that the article contains a mixed bag for Georgia.  There is NO question that the market here has been damaged, but at the same time, there may be rays of hope hiding in the tunnel.

The Eight States Running Out of Homebuyers

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Wayback Wednesday… The Price IS Right (or it should be)…

"FOR SALE" - a classified ad in a ne...
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Do you want to actually SELL your house, or just put it up for sale?  I talk with sellers pretty regularly that seem to just want to have their home up for sale…

  • “We want to test the market.”
  • “If we can got our price…”
  • “We aren’t going to give it away.”
  • You get the idea, right?

And this isn’t the market to play around in.  With foreclosures and short sales and unemployment being what they are, this is a bargain hunter’s market.  This isn’t a test market.

Along the same lines are some of the “strategies” I hear regarding pricing.  I wrote this post two years ago, and there are some warnings for buyers, too.

Sellers, price right and don’t play around.

Buyers, when you find one priced right, don’t play around.

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Lane’s Prognostications for 2011…

Real Estate = Big Money
Image by thinkpanama via Flickr

We’ll see how well I peg this.

Lane’s Predictions for 2011…

Looking back over the last year or two in real estate market reports, there are a few things that have been jumping out at me.

  • For over two years I have been hearing about the millions of homes in “Shadow Inventory”.  These are properties in the foreclosure process, or already foreclosed, that the banks are basically sitting on, waiting until “the market improves” before releasing them into the market.  I predict that next year there will STILL be people talking about the coming giant wave of Shadow Inventory. It isn’t that there isn’t a shadow inventory, but that we have dropped from over 10,000 homes on the market in Gwinnett County, GA to around 6,000.  Even for the overall Atlanta Metro area, we have gone from 120,000 homes to under 70,000.
  • The federal government has been borrowing unheard of amounts of money for the last few years.  Much of it has come from China and other foreign investors… but the deficit spending is not coming to an end, while the depth of the investment pool is…  Despite the best attempts of the Fed, Interest Rates ARE going to rise. Currently we are seeing rates under 5%.  I expect that we will be looking at closer to 7% by the end of the year.
  • Looking at the market reports, there are a few things that are VERY obvious.
    • Government Stimulus for the Housing Market only provides a temporary bump… and then it is worse than it was before, but there will be another wave of government intervention I hope I am wrong on this one).
    • The entry level market (under $200k) is well on the way to recovery… and that will continue. We won’t really know it until around September or October because it will be masked by the tax credits in 2010.
    • Meanwhile, it has been a rough ride for the luxury market.  And I don’t think we will see a meaningful recovery in prices for the Luxury Market (above $600k). There is a lot of downward pressure on this segment, and while there are some signs of strength, the best that segment can hope for is stagnation.
    • The “Near Luxury” segment (from $200k-$600k) will be mixed. It is also the market to watch for signs of permanent recovery.  I know that I will be watching the $200k-$400k and $400k-$600k segments to try to glean the health of the overall market.
  • I fully believe that unemployment (or rather employment) is at the center of the struggle in the Housing Market, and not the other way around.  Until the Unemployment rate drops, housing cannot really recover.  I don’t see Unemployment going under 9% during 2011. In fact, unless something changes radically, I don’t think it will even get that close (maybe 9.3%).

I’ll probably have a few more predictions before long…

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Wayback Wednesday… Looking Ahead to 2009…

Fiat 500 (2007)
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Two years ago this week, I posted up my predictions for the next year.  That year would be 2009.  I got a few right, and got a few wrong.  I was just looking back and I was surprised by them… some were pretty bold.

Here is the original post

Here is a quick rundown of how I did…

  1. Right
  2. Rightish
  3. Hit that one
  4. Kind of right…
  5. Not so good on that one
  6. That one was good
  7. Nailed that one
  8. Not so much
  9. Got that one pretty right
  10. Hit that one out of the park…
Rundown Shack OF
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On my “bonus predictions”…

  • Red Wings, yes.  Bruins, no.
  • Islanders, yes.  Thrashers… pretty close.
  • Chrysler… bought by Fiat.
  • Saturn, closed.  Hummer, sold.
  • Toyota had a loss for the year.
  • How’s that Global Warming working out?
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Wayback Wednesday… Fear/Greed and “the Deal”

Figure 20 from Charles Darwin's The Expression...
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Two years ago, we were in the midst of the financial system meltdown.  real estate was looking bleak… and so was everything else.  Unemployment hadn’t really reared its ugly head.  It was swirling up, but still seemed manageable.

So, I thought that a blog about market psychology was in order…  And this isn’t just real estate.  The same holds true for any kind of market.

Fear and Greed

Those are the emotions that drive ALL markets.  Stop into the old post and take a look at the background.

In a nutshell, when fear overruns greed, markets expand.  When greed overtakes fear, markets contract.  Many are still fearing.  The market hasn’t recovered.  As the bubble was inflating, there was little fear… greed had full run of the emotional mind.

The markets will recover, barring some massive calamity like the currency market collapsing.  People just have to start being more greedy than fearful.

We need to keep a little of that fear in the back of our mind, too.  It will keep away the next bubble a little longer.

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