Copy for Real Estate Guide Column for 10-31-08

REAL ESTATE PATTERNS
By Ken DuVall

ON THE BRIGHT SIDE!

The financial crisis has shaken the world to its core. After a decade of excessive borrowing and lax regulation, the economy is in the grip of a painful process. As usual, America’s obituary is fashionable in the liberal press. But U.S. home sales were up unexpectedly this week and it’s time to unemotionally and clearly reassess America’s prospects as quoted herein from a brand new Bank of America report. FACTS:

THE U.S. IS THE LARGEST AND MOST PRODUCTIVE ECONOMY IN THE WORLD. With just 4.5% of the world population, we account for 25% of the global gross product and produce more output a year (about $14 trillion) than the next four largest economies- Japan, China, Germany, and Great Britain- COMBINED.

THE U.S. IS THE WORLD’S LEADING MANUFACTURER OF GOODS. We are a manufacturing powerhouse, #1 in output. Our share of global manufacturing was 20.5% in 2006 (the latest data available), little changed from the 22% figure in 1990. China ranked a distant second, 13%. Our output exceeded that of Japan and Germany combined.

THE U.S. IS THE LARGEST EXPORTER OF GOODS AND SERVICES IN THE WORLD. Significant and often missed is the fact we are the world’s top exporter with combined exports of $1.4 trillion in 2007, or 9.4% of all global trade.

THE U.S. IS THE WORLD’S FAVORITE DESTINATION FOR FOREIGN INVESTMENT. Lost amid the chatter about outsourcing and jobs shipped overseas is this simple truth: we remain the most attractive market in the world for foreign investors. The allure includes our vast and wealthy market and large SKILLED (anyone bought anything from China or “talked” to a Bombay tech support person lately?!) labor force. Foreign investment here totaled $1.3 trillion between 2000 and 2007, compared to China’s of $483 billion, roughly 1/3 of ours.

THE U.S. IS HOME TO THE TOP GLOBAL BRANDS. More than HALF (52%) of the world’s top brands were AMERICAN in 2008. Of the top ten global brands, EIGHT were American, giving us an unequaled global footprint.

THE U.S. REMAINS THE WORLD’S TECHNOLOGY LEADER. We are still the world’s most innovative economy. America’s risk-taking entrepreneurial streak underpins our tech leadership that continues to attract and challenge the best and brightest from around the globe to live and work here.

THE TOP-RANKED UNIVERSITIES IN THE WORLD ARE IN THE U.S. Nearly 40% of the top 100 are here. American universities hosted 600,000 students- 20% of ALL international students- making the U.S. the top destination for foreign scholars.

THE DOLLAR IS STILL THE WORLD’S TOP RESERVE CURRENCY. It accounted for 65% of global bank reserves last year. The euro ranked a distant second with a 25% share. Granted our financial crisis has undermined foreign investor faith- but still the dollar remains king. There’s no substitute for the buck. China’s currency is not even convertible. Japan’s trade is still conducted in dollars.

There’s no denying some things are broken in this country. But America remains the most resilient and competitive economy on the planet and will continue to be far more dynamic than the pessimist media would lead us to believe. They do us all a major disservice. America will prevail and we shall endure. So be 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.

Copy for Real Estate Guide Column for 10-24-08
REAL ESTATE PATTERNS
By Ken DuVall

PANIC IN THE STREETS!

What we’re seeing now is a case of classic market panic. Uncle Sam’s steps will help the economy but not soon enough for scared investors and to ease the global mood of irrational gloom and doom. Fifteen cents of every dollar in this nation is spent on housing. We now know it’s the engine that runs this country, and we’ve severely maimed the Golden Goose. We mistakenly thought that anyone could own a home whether they were qualified or not. We were wrong and we’re paying the price. We’ve been betrayed by greed and charlatans. Revolting.

What’s next per Kiplinger and other experts? The economy and housing won’t grow for about a year. With all the government and financial measures now being undertaken, we will avoid another Great Depression. But all the king’s horses and all the king’s men cannot reverse the current cycle. Recessions must run their course. But the Gov’t will pump enough money into the banking system to revive lending, a critical factor in recovery. Appraisers are now using foreclosure prices- the latest sales- for their comparable sales data. See more below.

The good news is that Warren Buffett is buying into the stock market big time, $12 billion just last week. He says, “Fears about the long-term prosperity of the nation’s many sound companies makes no sense. I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month or a year from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either public sentiment or the economy turns up.”

“So if you wait for the robins, spring will be over. Buying now is better than trying to time markets and guess when a turnaround will happen.” Buffett is the nation’s richest individual with a net worth of $58 billion. Buffett quotes hockey great Wayne Gretzky: “I skate to where the puck is going to be, not to where it was.” On the flip side, billionaire Kirk Kerkorian this week bailed out of his shares in Ford Motors to the tune of a half billion dollar loss. I’ll guess with you.

But Uncle Sam’s plan is beginning to thaw our frozen credit markets and is easing this crisis, though calming a chaotic Wall Street may well take months. The dynamism and heft of the U.S. economy will be put to the test, but as it now appears, not defeated. Amen.

Meanwhile, Southern California home sales soared a record 65% in September from the same month last year. Reason: cut-rate foreclosure sales, accounting for half of all transactions, but which pulled the median home price down 33% year-over-year. The good news: we’re whittling down that glut of unsold inventory.

P.S. I’ve been in this business for 45 years. I’ve too have never seen anything like what’s happening now. But I can tell you this: after all is said and done, real estate will be a survivor.

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 10-10-08

REAL ESTATE PATTERNS
By Ken DuVall

AMERICA HAS ALWAYS COME THROUGH!

We all live on hope and the promises of others. That’s the way it’s always been. It’s just that the whole world is in full-on freak out panic mode right now. Buy, sell, hold, punt, pray for salvation, on and on. Collectively, we really don’t know which way to turn right now. My Dad always said, “When in doubt… don’t!” It may be the wise choice but to do nothing as the dust settles around us.

It’s been said that politics is the conduct of public affairs for private advantage. Mark Twain said, “It could be shown… that there is no native American criminal class but for Congress.” A culture of corruption exists. But what’s done is done. What’s left is how we handle it. It’s also been said, “After the wars are over, there are many casualties, but the real estate is always left.” Hold that thought. It may be your salvation.

At least the FBI is now investigating 26 financial institutions and the people who ran them including Fannie and Freddie, whose collapse triggered the current meltdown. Outright fraud and “liar loans” put us in this jackpot. They packaged rotten loans and changed the name (to protect the guilty!) to “AAA rated” and re-sold the products as “riskless”. The Enron guys went to jail. Many unindicted felons are still walking around free. The whole mess is disgusting.

Make no mistake: the current global credit freeze is frightening. But we’ve feared the worst before. Remember ‘Black Wednesday’, 10-19-07; the S&L crisis of the early 90’s; and the Asian meltdown in ’97 when Koreans lined the streets of Seoul to donate jewelry to shore up their currency. In all cases, markets ultimately bounced back. According to the Int’l Monetary Fund, we’ve seen 124 worldwide banking crises in the last 25 years. The U.S. financial system survived every time. Amen.

Kiplinger says we’re probably now in a recession. Our economy won’t begin to pick up until the middle of next year, at best. Figure home prices nationally have 10% more to drop. New home sales probably won’t pick up until 2010. The Fed may cut their rate before Election Day in a bid to further aid our staggering economy.

The Fed Economic Recovery Act of 2008- the “bailout”- will help slow the descent in home prices. Word on the street is the Fed will actually MAKE money on the deal, purchasing those bad loans for pennies on the dollar and selling them for far more. BofA/Countrywide’s $8 billion agreement this week settled their deceptive loan practices lawsuit that will modify troubled loans to keep 400,000 borrowers from losing their homes.

On balance: This financial rescue is NOT the deepest intervention in our economy since FDR’s New Deal in the 40’s. It’s not even close to the dismantled market controls of the 70’s and 80’s. Then, deregulation STIMULATED free enterprise, competition, and economic growth. Thank goodness the election will be over next month. Depending on who wins, we may just start getting some GOOD news again from the media!

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.