So the hot topic in the world of business these days is Europe. And it’s not just for their cutting-edge fashion, holier-than-thou attitudes or super-weird toilets. This time it’s because they are all enjoying their own adorable debt crises. Did you know that it’s a whole bunch of different countries over there? And they all have their own little leaders who may or may not like each other? And all their leaders have funny titles like Prime Minister or Premier or Grand Poobah? It’s Ri-DIC-ulous.
To be honest, I don’t really care. Chances are you don’t care either. All you know is that if catastrophe strikes over there, it will somehow drag us into the ooze along with it because we’re all inter-connected in this global economy. Like ‘It’s a Small World” only with mortgage-backed derivatives buried in each of their respective national debt structures. The only remotely amusing thing to report is that French President Sarkozy was caught talking smack about Israeli Prime Minister Netanyahu and Obama was caught not doing anything about it. Oh SNAP. No he di’int! Looks like this jive-talkin’ turkey best check himself befo’ he wrecks himself.
And by “wrecks himself” I mean ends up on the receiving end of a couple dozen nuclear warheads. Seriously, the whole Israel/Palestine thing is nuts to begin with. I wouldn’t try to piss any of them off.
What we’re all concerned about is what’s happening domestically. Well, we’ve actually got some enjoyable stuff going on. September new home sales came in at a 5.7% month-over-month increase, the first uptick in 4 months. October jobs report showed an increase of 80,000 jobs, hinting at a thin silver lining shining over our dark employment picture. This follows an upwardly revised increase from 103,000 jobs created to 158,000 in September and was enough to tick the unemployment rate down to 9.0%. Not great, but certainly good.
But not everything is sunshine and roses. Remember last newsletter when I said that Orlando was effectively underwater? Well, analysts have one-upped me in a humongous way, boldly stating that half of homes backed by a mortgage are effectively underwater. By their train of thought, homeowners who owe 85% or more of their home’s value are effectively underwater because they lack the 6% realtor commission to sell their place and a 10% down payment on whatever new home they seek. So those homeowners (about half of all mortgagors) are stuck in traction from the situation.
Let’s take a step back and enjoy a hot logic injection: equity is purely based on widespread belief. Period. When (not if) people begin to believe in real estate again for what it fundamentally is, previously sidelined buyers will creep back into the market, demand will rise, bidding wars will ensue and ka-boom, equity returns. A virtuous cycle will kick in and the whole thing will be back on track. Suddenly not so many people are underwater. If you are betting against this series of events coming to fruition then I look forward to saying “I told you so” a decade from now.
What, pray tell, do I believe real estate fundamentally is? A slow-and-steady appreciating asset. One of the only asset classes that average consumers can leverage smart, tax-deductible debt safely against. A physical piece of the American Dream. A kingdom all your own. The place your kids remember growing up.
I have never believed I would be able to “sell” any of you on the concept of buying a home through these newsletters. That decision is, in my opinion, more contingent upon your personal life circum-stances than it is on what kind of “deal” happens to be available. Let there be no question: there will be no shortage of bad news for the real estate market for the near term future. But that doesn’t diminish the intrinsic value of owning a home. Fact of the matter is that owning a home can be one of the most rewarding things you ever do. And I’m here to make that happen for you.
So please use me as an asset. Got questions about something you saw on TV? Call or e-mail me and I’ll provide some clarity. Been thinking about restructuring the debt on your real estate investments? I’ll crunch numbers for you to figure out what is the best course of action. Thinking about buying a place in the next two years? Let me know and I’ll show you the best path to get there. I’m here for you to help in any way I can.
If I were next to you, I would totally bro-hug you right now. That’s how much I care.
On a completely unrelated but hilarious note, KEL law firm (famed for helping people fight foreclosure cases) has been ousted from the Better Business Bureau amid complaints. This is the first area law firm to be drop-kicked through the goalposts of FAIL in 27 years. They were accused of charging thousands of dollars for foreclosure-defense or mortgage-modification services that were either poorly done or not done at all. So maybe consider talking to industry professionals if you’re in trouble as opposed to overly-advertised lawyers. Juuuuuuuuust saying...
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