Notes on Real Estate

Not a bad month forthcoming. We have a closing scheduled for the 20th. We have a very nice 3-bedroom, two story over in the Como area between both U of M campuses we just put on the market that is getting action. It is a great income property and fine single family home, take your pick.

In case you aren't tired enough yet of my being a Real Estate Chauvinist, read on:

"The problem is not that there are problems.
The problem is expecting otherwise and thinking
that having problems is a problem."
-- Theodore Rubin

Back when the DOW jumped upward, did you hear much about how the previously healthy home market was the reason? Now, it's all about sub-prime mortgages, foreclosures, and the glut of homes-on-market.

It might just be all about greed. As likely, it is about ego. Combined or alone, the result is people's strong propensity to blame scapegoats.*

Homeowners and others had raised their own expectations about the value and equity increase in homes. The recent feeding frenzy, which had two very nasty ingredients, was ultimately in the hands of the consumers.

One nasty ingredient was the tendency for people to really believe that for some reason their homes should be escalating in value at insensible rates. This was almost an ego driven perspective. I know people who bragged about how much the value of their home had gone up, as if to show how smart they were to have bought it, what wise investors that made them. Most had simply bought a decent home to put a roof over their heads, long before the seller's market went nuts.

The other nasty ingredient was the greed of predatory lenders. It was almost like the looting seen on TV after a natural disaster. Except this time, it was the poor being looted. The plunderers were the people who jumped, unlicensed and unregulated, into the mortgage game. They provided the stated income and sub-prime, adjustable rate mortgages to folks they knew could never maintain the loans. They didn't care, so long as the commission came into their hands. Indeed, there were many new and unscrupulous REALTORS®, too. Shame on them all.

Who really wins, once the dust settles?

People who qualified for loans legitimately, and who bought reasonably priced homes (mostly before 2003 or so), and who are willing to look at their home investment the same way the people who sell you stocks tell you to look at those investments – For The Long Run; that's who.

Even people who bought inflated priced homes, if they settle down and relax and own the darn thing for six to ten years, will see an overall increase in value that will be both reasonable and rewarding.

Meanwhile, lest I editorialize too much, why are we not hearing that the massively inflated gasoline prices; the upcoming election rattles way early in the usual fray; and the lack of solid footing for most positions on the war in Iraq; plus the very strong subliminal reality of international terrorism – not to mention the ongoing plight of our celebrities and athletes - (okay, forget I mentioned it) . . .

. . . Why are these things not also given strong credit for our uncertainties regarding where we put our money?

If a person really wants to buy a house, and has a decent credit standing, there has not been a better time in a long time to do it. It is truly a buyer's market. The Fill-in-the-Blank part of this phrase makes that abundantly clear. "_________________; sell high."

"On Thursday last week, 7/26, the stock market ended with the second worst sell-off this year, with the Dow Jones Industrial Average dropping over 300 points, shaving 2.3 percent off the previous day, while the NASDAQ lost 1.8 percent. If you owned an index fund tied to the S & P or DOW, you lost 2.3 percent, too. You lost in one day what housing is expected to lose for the entire year. And economists say housing is in a tailspin? Maybe it's time to bail out of stocks, not housing."
Full Story: Realty Times

The three most valuable brand names on earth: Marlboro, Coca Cola, and Budweiser, in that order.

It becomes noteworthy, then, and beyond irony, that:

The first owner of the Marlboro Company died of lung cancer. So did the first "Marlboro Man."

What has this to do with real estate? Not much. Perhaps it does indicate that we are often far more interested in satisfying our urges than our necessities. That's why I feel it is appropriate to conclude with this bit of twisted sagacity.

"Half this game is ninety percent mental."
--Philadelphia Phillies manager, Danny Ozark

*For more and varied info on the current market, See: Matrix That’s it for now. Except this:

1. If you have interests or questions, please e-mail me or give me a call.
2. Check out my website HERE

The opinions expressed in this newsletter are solely those of Tom Crone and others being quoted and do not necessarily reflect the opinions of Coldwell Banker Burnet or its affiliates.