Copy for Real Estate Guide Column for 3-21-08

REAL ESTATE PATTERNS
By Ken DuVall

NO RECESSION?

The ultra-moderate UCLA Anderson Forecast released last week says they are sticking to their “no recession” prediction. Their reasoning: the housing market and mortgage lending industries, weak as they are, are simply too small in relation to the overall economy to cause a recession. Surprisingly, UCLA’s predictions are usually the worst doom and gloom we ever hear. May it go from their lips to God’s ears!

Though the economy is clearly slowing, a recession traditionally occurs within a year of a slowdown in housing. This time, though, housing has been in a slump for 2 years and there’s still no clear recession, a sign the nation may squeak by. Despite the hard-hit housing market, falling home prices, rising foreclosures, the subprime meltdown and credit crunch, avoiding a recession has always been based on a correlation between housing and the labor market. Hard to believe but we’ve seen the economy in much worse shape in the past. Perception sometimes becomes reality.

Presently the ongoing housing collapse has come without major job market problems. People are walking away from their homes- not because they lost their jobs- but because declining home prices have turned their net worth negative. When you owe more than the house is worth, many simply decide to give it back to the bank. It sounds like we’re going to have sluggish growth for awhile but maybe not a full-blown recession. And the $200 billion the Fed kicked in last week may help. On top of this week’s funds rate cut, more could come.

This is the scary stuff: the foreclosure crisis has resulted in a drop in municipal tax revenues, a spike in the crime rate, homelessness, and an increase in vacant properties. When no one’s watching the store, the critters creep in and take over. There’s urban looting, crime is on the rise, and no money for more cops. But as Kiplinger says, “There’s little reason to fear a collapse. The economy remains structurally sound, though slowed. In fact, a healthy rebound is certain, although not until year-end. Bottom line: the fall isn’t over, but there’s no need to panic.”

The notorious Rancho del Rio is again available for $22.5 million. Situated on 187 chaparral-covered acres, the 1930’s era Spanish hacienda has numerous guest rooms, a vineyard, lake, and a dozen scattered buildings including stables, caretakers’ quarters and barns. It’s peaceful, serene and gorgeous, a little piece of the 1800’s just 7 miles inland from San Juan Capistrano, the largest piece of residential acreage in Orange County.

It was once owned by the infamous Harvard University psychology Prof. Timothy Leary, who preached “Turn on, tune in, drop out” in the 60’s-70’s. It was initially used as his huge dope depot. There was a subterranean vault accessed through a hidden trapdoor in the barn where the tons of illegal drugs were stored. Later the Girl Scout Council bought it for $2.38 mil and used it as a Scout camp until 2000. The current caretaker believes there’s a satchel of money buried down in the vault somewhere. He says, “I’m still looking for it.”

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.