Thursday, October 2, 2008

Beginning October

These are the Days of Our Lives.

Things are getting serious. Twas a September to Remember.

My tea leaves are reading that the Bailout Bill was probably stuffed with enough pork to pass. Love it or hate it, it is what it is…and it will impact the way we Fall through the Fall.

First, you must read the New York Times article As Credit Crisis Spiraled, Alarm Led to Action

Need more proof something had to be done? U.S. Auto Sales Fall 27%, Most Since 1991

People are asking me how this bill will impact housing. Specifically, I’m not sure that it will…

  • It won’t stop or limit foreclosures.
  • It won’t lower your mortgage payment.
  • It won’t make your house go up in value.

The impact might be in round-about way, by “restoring confidence to the credit markets.”  Meaning…potential buyers might become confident that prices may be near a bottom and that now is indeed a good time to buy. Could the fact that the government is now even more involved give some buyers the confidence to act? Sure it could.

With low rates and a potential psychological boost, October could be a good month for real estate.

The short of it is this: if you’ve got a property to sell, right now is probably going to be your best chance to get your best price for some time. Be smart. See both sides. Be realistic.

The long of it, however, is this: Without exotic financing, the average Joe still can’t afford the average Home. We are in the middle of a massive, multi-year unwind. Assets (homes, stocks) were over-priced and are slowly falling back in line with the personal incomes that support them. Despite all that has been promised on TV, no amount of government tinkering can keep this tide from eventually going out.

Think about it…is the problem that house values are falling? Or is the problem that they haven’t fallen far enough?

And, foreclosures are starting to hit close to home. I can tell you that, in Danville at least, the social mood has changed.

1 Year Ago: “Stockton, maybe, but not here in Danville…people make too much money.”

6 Months Ago: “So there are a few in won’t get that bad. It’s different here.”

3 Months Ago: “Do you know a good appraiser?”

1 Month Ago: “Do you know anything about that house around the corner?”

Today: “I can’t believe it...Three of my friends are losing their homes.”

Which, brings us back to the Bailout. Just as every story has two sides, so does this plan. I would recommend that all of you read this piece from Bloomberg this morning Paulson's Reasons for Delaying Day of Reckoning: Jonathan Weil

Oct. 2 (Bloomberg) -- If you think this bailout is expensive, just wait until you see the next one.

The $700 billion rescue plan approved by the U.S. Senate won't fix the core problem with the nation's ailing financial institutions. And it almost guarantees that you and I will have to pony up for an even costlier bailout someday, maybe soon, if the House of Representatives passes it tomorrow.

For those of you with the desire to see all sides, consider reading why a Harvard Economist says Bankruptcy, not bailout, is the right answer. Also, take a look at That Giant Sucking Sound and other recent posts to Mike “Mish” Shedlock’s blog. He has been one of the most influential and outspoken opponents of this bill.

Regardless of where this ship is going, we’re going there together. Forward this on as you see fit.

For those of you who are investors, we are going to have some great opportunities over the next few months.

The time has come to selectively buy!

For those of you who are sellers, the time is now. Let’s take action!

For those of you who are watching all of this unfold, stay present. These could be the defining times of a generation.

Lastly, if you, or someone you know could be in trouble, you have rights and you have options. I’d be happy to help in any way I can. The sooner the better.

The days are going by quickly!

Proper planning and perspective now can help us enjoy the Holidays and start 2009 on the right foot.