Copy for Real Estate Guide Column for 10-26-07

REAL ESTATE PATTERNS
By Ken DuVall

IT'S NOT NICE OUT THERE

I’m not going to pull any punches here. You know I don’t buy into the biased media’s hype. I see right through their provocative “reporting”. But there exists a risk of a freeze-up in credit markets if remedial moves now underway fail. For now, hope for the best as this drama unfolds. So this week we shall concern ourselves with the big picture.

Our markets are utterly dependant on continuing foreign investment. The good news is that China and the U.S. are negotiating an enormous money/asset sharing arrangement to stave off any potential global financial crisis. But not to worry: big money invariably swoops in and gobbles up any weak players. It’s known as survival of the fittest and strengthening of the breed. Buying on bad news can always be profitable.

The next few months will be crucial with some $400 billion in commercial loans coming due. The pain being felt by big banks could spread. Fact is the economy is hovering near the edge of recession. But guess what: a recession would be just another element in the current correction cycle. We shall endure.

On the bright side for borrowers, the mortgage-rate defining 10-year T-note plunged to 4.4% this week, down from 4.7% last week. Yet lenders are running for cover. Citibank, Bank of America, and giant Countrywide Financial are reported to be in even deeper trouble than originally thought. That scenario may worsen should more bodies be uncovered.

This market sea change is being driven primarily by amplified public awareness. Our morale has been shattered. Anyone surprised by negative news has been living on another planet. The problem isn’t so much slumping home sales, tumbling housing starts and shaky prices. It’s psychological. Everybody is just major spooked.

But these negatives don’t indicate housing will continue spiraling downward. As long as the underlying economy continues expanding, which so far it is, with decent increases in employment, household income, and ongoing population growth, we will keep generating more than enough new households. These are the keys to recovery. Another Fed rate cut next week, in doubt last week, seems almost a sure thing now. But that reduces the dollar’s attractiveness again. There’s no free lunch.

Barring some calamity out of left field, it’s not unreasonable to expect housing stabilization late in 2008. The Fed’s recent interest rate cut will help next year, too late for any significant 2007 impact. There’s no magic potion to reverse the current mindset, especially when bad news keeps piling up on itself day after day. The herd will ultimately calm down and time will heal the wounds. America will fix the wagon.

Sellers: bury a St. Joseph statue in your front yard. St. Joe has been the patron saint of homes since the 1500’s. The little statues are flying off shelves. One owner said, “My house was on the market for months but within a week of burying the statue, I had an offer!” Don’t scoff. We can use any help we can get these days. Believe and you will achieve!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 10-12-07

REAL ESTATE PATTERNS
By Ken DuVall

ON BALANCE

I’m on a rant this week. I’m disappointed with some of the biased media’s style of “reporting” the news. I’m certainly not going to whitewash the bad news which we’re being inundated with now. But their slant on what’s happening is doing a disservice to housing. They’re putting a big undeserved hurt on homeowners, plus all the companies that support real estate too.

Bad news sells newspapers. We’re a captive audience. After you hear there’s a bogeyman in the closet long enough, you’re afraid to open the door for fear of confronting some monster lurking inside! Buy or sell real estate or go get a loan anymore? “Fuggedda about it! Don’t you know that there are bogeymen out there?!” Housing’s not fantastic today, but it’s not life threatening either. As Dr. Phil would put it, “It’s OK to not be afraid.”

I read three newspapers daily as well as many online news services. I’m amazed by the different treatments of the same identical news item, depending on the source. In all fairness, we can’t blame the media for real estate’s predicaments as I say below. But I know that things are not nearly as dismal as many in the media portray. The power of the press is enormous. They can literally “validate” anything.

On the bright side, it was certainly good news to see the stock market’s recovery in celebration of the credit market weathering the storm. The analyst’s consensus now is that the damage has been acknowledged and contained. Contrary to the media’s dire (“global meltdown imminent!”) predictions, the sky did not fall on the financial world. In the opinion of most experts, it won’t fall on the real estate world either.

We’ve just experienced the greatest real estate rally of all time. Many made fortunes. We’re catching our breath now. Sales volume and prices are giving way. You can’t fly that high, that fast, and for that long without an adjustment. We’re in a correction period. Markets are cyclical. Thou shalt not mess with Mother Nature or you upset the balance of things, and then you pay the price.

If we weren’t constantly hearing this “the bottom is dropping out” negativity, housing would recover more quickly. Yogi Berra said it: “… half this game is mental.” We need our hands held- not slapped! But the reality of the current cycle is that it’s one of the best buying opportunities we may ever see. Take advantage while it lasts. Don’t be afraid of some make-believe bogeyman. I’ll be back next week with the upside of things- that is if the sky doesn’t fall on me!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.