Copy for Real Estate Guide Column for 1-30-09

REAL ESTATE PATTERNS
By Ken DuVall

WHAT WILL CAUSE THE RECESSION TO END?

To understand, we must fully comprehend what created it. There were many elements, but the most visible was the unrestrained real estate boom. Its collapse nearly derailed the world. Then it was the sub-prime crisis where entitlement borrowers got loans they had no chance of repaying. The government indicated we would weather the crisis and the economy would withstand those catastrophes. Wrong. We did not weather the crises. We now know that as the real estate market goes, so goes the economy.

Talk about geese bringing down an airliner. We severely wounded our Golden Goose, the housing industry which directly or indirectly employs about 20% of Americans. That’s huge. We couldn’t possibly sustain that significant a weak link in the overall chain. Now the recession has spread around the globe, due to the importance of our economy to them. No entity is bulletproof. They’re dropping like flies everywhere.

So, when will it end? The conclusion of the weak real estate market will bring with it the end of the recession. Of course, the Big Question is: when will the real estate market become strong again? There are positive signs. Look at the cost of ownership vs. the cost of renting these days. At the height of the boom, the cost of owning was significantly higher than the cost of renting, though some costs were masked by easy lending standards and innovative products.

Obviously, housing prices are now down, as are loan rates, to the lowest on record. There are already areas of the country reporting that owning has become cheaper than renting, especially after taxes. You just have to know where you’re at in the game. Sacramento home sales are booming again with investors snapping up foreclosures and renting them out to people that can’t get loans. Chico’s foreclosure rate is a mere pittance compared to other areas.

As we attain this point in the majority of the country, expected by some experts by the end of this year, housing prices will stabilize. And as prices become stable, banks will be willing to lend again. This cycle will lead us out of the morass. Coolheaded house shopping now could land you in your dream home at a major reduction over what it cost 5 years ago.

To be sure, challenges remain, and unexpected events could yet turn negative over this year. But when the national economy improves, the Golden State remains well positioned to take advantage of the next surge. The politicians will not allow us to go down the tubes. Arnie and the Legislature will get their act together soon. So too will Chico and Butte County. After all is said and done, this could turn out to be the greatest home buyer’s market in history! Timing is everything.

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 and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 1-16-09

REAL ESTATE PATTERNS
By Ken DuVall

THE BEST OF TIMES!

We need hope in these difficult days. I’m a guy who believes there’s always a pony in the manure pile if you just dig deep enough. It depends on which news reports you read. Fortunately, we’ll start getting good news again after the inauguration next week when the media begins supporting “The Bamster”. We can sure use some.

There certainly isn't much to miss about 2008- other than our savings, our homes, our jobs, and our faith in our financial/political systems! And cynics say there isn't all that much to look forward to in upcoming months. I look forward to otherwise, as do some 70% of the top national money managers. Yet more tales of corruption, abuse, and fabrications from those in the halls of power seems inevitable. Does anyone remember the fall of the mighty Roman Empire 2000 years ago? Lesson: we better clean up our act fast.

Yet “Housing Markets Will Roar Back in 2009”, proclaims Alexis McGee, real estate expert, educator, and “Outlook” president based in Fair Oaks in their latest report. “The nation’s foreclosure hemorrhage has finally slowed and 2009 should see a significant decline in foreclosures as buyers return, finally pushing home prices back up and fueling a real estate recovery.” While optimistic, that remains to be seen. Encouraging: interest rates are at a 40-year low.
“Recovery is underway. Affordability is back in the housing market,” McGee continues. “In 2009, housing will not only recover, but we’ll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market. I can see prices rising again in 2009. California is a great example of what’s happening now and what lies ahead for the housing sector.” From his lips to God’s ears! Even stock brokers are saying this is the time to start buying again.
But if you think about it, this may in fact be the best of times. When in modern history could you have pointed to an economic bottom with such assuredness? I would guess we’re at it, or very close. Once you do hit bottom, there’s no way to go but up. We've cleaned the sewage system in the finance industry. We've purged the subprime loan debacle. We've exposed the biggest Ponzi scheme ever. We've discovered politicians' affairs, payoffs, bribes, and conflicts of interests. The price of liberty is eternal vigilance.

Other things we learned last year: Thou shalt not make “liar loans” lest ye topple the country! Real estate prices don't always increase every year. Financial records too good to be true probably are. Making products nobody wants doesn't make good business sense. We know we must care for our planet to protect ourselves and our future. The important thing in this world is not so much where we stand as in what direction we’re moving.

I say this could be the best of times simply because the worst of times may be behind us. We’ve had a major wake up call. Now we must counter the massive pessimism and paralysis out there, restore confidence, and hopefully live happily ever after. Miraculously, everything somehow gets handled. We will once again arise from the ashes. Amen.

P.S. On the lighter side, a true story in the news: a Chicago restaurant is now offering a “’Bleeping’ Blagojevich Burger” that comes with a slice of baloney, and- the price is negotiable!!

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 and all my columns at www.KenDuVall.com. Call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 1-9-09

REAL ESTATE PATTERNS
By Ken DuVall

TRY AND HAVE A HAPPY NEW YEAR!

Ronald Reagan said it: “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” He also said, “Politics is not a bad profession. If you succeed, there are many rewards. If you fail, you can always write a book.” I think we’ll be seeing a lot of books!

Way back when, the horse and buggy was king. They, along with thriving buggy whip companies, disappeared with the advent of gas engines, automobiles and tractors. Who ever thought that some new-fangled invention could ever replace thousands of years of horses for wagons, plows and trolleys? And now, Detroit itself is transforming. The UAW could end up owning the Big Three Automakers before it’s over. Some things change, but some don’t. U.S. railroad tracks are the same exact width that Roman chariot wheels were!

Lately, major economists are predicting that what is shaping up as the deepest and longest recession since the 1930’s will end later this New Year! The ongoing impact of $2 trillion in government stimulus along with pent-up demand and returning consumer confidence will finally lead us into a turnaround. Dr. Scott Anderson, senior economist for Wells Fargo, predicts the housing sector that led us into this morass is about to turn the corner and will lead the way out. So be it.

Chief investment strategist Dr. Jim Paulsen at Wells Fargo states that despite continuing job losses, the “fear mongering” by government officials and the liberal press have led to “economic paralysis”. Now “consumers who waited to buy a car or a home will definitely buy one.” As I always say, demand never stops. It just gets delayed sometimes. The national year-end home sales/price stats are totally dismal but I have faith we’ll pull out of it.

America ranks at the top of the pile: With the largest economy at $14 trillion, the U.S. dwarfs every other, triple that of Japan; the most broadly used currency; the biggest importer/exporter; the mightiest military; and by far the largest contributor to foreign aid. The U.S. is the world’s preeminent economy, even in the face of Treasury Bills now yielding close to zero percent. Global money still flocks to our safe haven. I believe America shall be reborn, stronger and better than ever.

As far as Beautiful Chico is concerned, we fared amazingly well in 2008 compared to 2007 with its 875 home sales, median price $325,000, 81 days on market. For 2008 we closed 755 homes, median $284,900, 75 days on market. The median price was down only 12.34% with sales off only 13.71%. Last week there were 101 more in escrow and a reasonable 360 active listings. Have a Great New Year.

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.