This is a picture of my family on a whitewater trip down the Payette River in Idaho in 2001. My wife has just been ejected from the raft and the rest of us don’t even know she has exited. Note that her eyes are closed, she is unconsious, that may have happened because of the G-force, it was a way for her body to shut down to prevent serious injury from occurring.
Now at first glance one might think this picture does not have a happy ending. It certainly looks like this could be a major incident for our family memories. The photo has enough drama in it that without a clear explanation one could draw their own conclusion as to what the outcome might have been. This picture has been published in a major outdoor magazine, a book and a calendar, without any caption or explanation. Yes, she entered the water unconsious, was carried downstream for several hundred yards under our boat. She did regain consiousness worked her way under the raft to the side of the boat where I caught a glimpse of her life preserver and pulled her back onboard. All turned out for the best, she’s OK.
The economy, especially “housing” is a lot like this picture. For example, many headlines are written and reports given that have a lot of drama to them. Without a clear picture of the whole story we don’t know what the actual events are that led to the circumstances we are in. Most reporting on our economics, including “housing”, have not been fully or fairly reported.
The photo’s headline could say, ” Last Seconds of Life Caught on Camera” or “She’s OK” works too. Well, when the Main Stream Media or our Politician’s rhetoric tell a story only in headline or a :12 sec. sound bite what other conclusion can the general public come to. The axiom, “If It Bleeds, It Leads” works for economic news and housing as well. Investor’s Daily News offers a an insightful commentary on this topic and you can click here to read it.
This just in, “Main Stream Media Cherry Picks Housing Stats“. No, really? Do ya think? You are not getting the truth, the whole truth, and nothing but the truth from your mainstream media. This is a politically motivated angle by the alphabet channels. Read as many varying news sources you can to prove to yourself that the “sky is not falling.” Remember, this is a hate Bush issue. The housing industry is huge to our economy. Spread wild stories about housing and you influence that economy. This just in, the total amount of people affected by the “subprime crisis” is less than .5% of all the mortgages out there. That’s the truth, the whole truth and nothing but the truth.
I’ve spent many blog posts writing about how you should interpret the housing crisis that is not a housing crisis. I met a very successful contractor the other day that is fleeing the Salt Lake Valley for greener pastures in St. George, Utah. He was very negative about the state of our housing. Seth Godin talks about The Dip one must push through to get to the otherside where the pasture is greener or success dwells. The main stream media will not give you an accurate story of what really is happening in our real estate market. Well, some people are telling it like it is, but it doesn’t get the headline it deserves. Jeff Tredgold nails it in his weekly newsletter The Tea Leaf, Domestic ABCs. More for you later.
A true story: I once heard the warranty coordinator for the builder I worked for, at the time, say “If it wasn’t for all our customers, I wouldn’t have any customer service problems”. Wow, how do you work around that? Warranty is generally a problem for the builder and the owner of a new home. The builder does not want to fix anything that has been mandated by state regulation. The homeowner will have to fight with the builder to get the problem fixed. Thus a stalemate arises. If your builder is exceptional, then he is the exception not the rule. So what is the difference between warranty and guarantee? Guarantee is proactive, no questions asked and usually contracted seperately from a real estate contract. A guarantee is definitive - warranties are general and often left up to interpretation, not always in your favor, but the builder’s. Builders should budget for warranty at 1.5% of the sales price of the home. But they don’t, that’s what makes warranty work he is responsible for left to his interpretation, it is poor budgeting that prohibits the builder from honoring and repairing warranty issues. But here is the real problem, if the builder held the trade partners responsible to build the home correctly, there would be less warranty work in the future. This is especially true of, plumbing, final grading and cement work. So ask for a Guaranteed Performing Home. If it is not guaranteed, then who knows what kind of a warranty coordinator you’ll get. You’ll need luck, lots of luck.
The media is reporting that in Utah the average selling price of homes fell, what does that really mean? The media very seldom takes the time to explain anything that is comprehensable to the general reader. The headline always glares bad news, “oh my gosh the average sales price is down”. What that really means is that homes are selling, but at a lower selling point, not price. If a bunch of homes are selling under $500K, then yes the averages will be down because the higher priced homes are not selling as well or as fast, but that does not mean they aren’t selling. Look for a headline in the near future, as $500K+ homes get absorbed by the market, that touts “average sales prices jump”. But even that doesn’t mean anything other than the market is doing just exactly what it does.
What does the State of Utah have in common with the States of Michigan, Florida, Arizona, Nevada, and California?
In regards to real estate, not a heck of a lot. Because, with the exception of Utah, the other states noted are in a subprime crisis that has seriously affected their housing markets. While the State of Michigan is not a sunshine state like the others, Michigan’s crisis has been impacted largely by the job market. The other states, with the exception of Utah, have experienced a subprime crisis affecting their housing that has been largely impacted by speculation and greed. Investors wanting to make a quick buck by flipping new construction investment properties mostly in sunshine states which tend to be popular destinations. What Utah does have in common with the other states is the subprime availabity. If their were at one time say a dozen subprime products for brokers and consumers to choose from, now there are only two. So a slow down in Utah’s “best in the nation” status is and was expected because of subprime’s limited choices. The lessons that can be learned from this are simply; spend less than you earn, save your money, don’t by more of a home than you can afford, stay out of debt, avoid over refinancing, avoid at all costs 100% loans with 2nd and 3rd mortgages, don’t sign mortgage documents that you don’t understand, avoid subprime mortgages, but rely on conventional and FHA/VA loans. So it matters not what state you live in or what state your mind is in, these practical common sense rules apply to all including real estate investors.
Call it what you want, but whining, complaining, criticizing, and belly aching are problems for us. It is not what made America great. It is not what motivates ordinary people to do extraordinary things. At this present time is an opportunity for those who recognize it and act on it. This will one day be remembered as the “good ole days” by many. One may also even hear in a few years from now people asking, “why didn’t I buy back in 2008 when the opportunity presented itself?” So ask yourself what is presenting itself before you that is an opportunity you can act on. Consider your situation, especially financially, and determine what is best for you not what you are hearing.
Accidently hit your thumb with a hammer recently? Have you ever done it twice within a few minutes. Amateur home repairs are the best chance for this to happen. But the “pounded thumb theory” is manifested when you hit the same digit repeatedly, indeed, after a while it just doesn’t hurt anymore. Hurts the first time, a lot, the fifth time - not so much. We get accustomed to the pain. For example the pain may be real, like filling the car with fuel weekly, pump shock, or more especially what the MSM reports day in and day out. There is so much negativity in the MSM that I am considering becoming a hermit. The negatives are pounded out about the war, housing, subprime mortgages, politics, President Bush, oil prices, our political leadership and general disrespect for anything good. Becoming a hermit is not the solution, but maybe I’ll stop listening to the radio and reading the news online, just long enough to stop the throbbing. And when it does stop, I’ll do what is best for me, my family, my community and my country , not influenced by what or how things are reported by the MSM.
The polling firm Zogby reports that 70% of Americans believe the MSM (main stream media) is out of touch. Duh! I attribute that to the Bill Clinton principle. That is, he has never gone away, he’s like a stalker. He is everywhere all the time, from 1990 to 2008 and beyond. After that many years we are exhausted of him. Is Bill Clinton in love with being loved by his adoring fans, or not? Hillary had to rein him in recently when she began to realize his liability to her campaign. Well the MSM is doing the same kind of thing in principle. Failure to report or comment on successes (the war), positives (the economy), truth (Bush’s policies), or any number of other complicated stories (sub prime, real estate, etc.) has made the MSM not credible to a lot of people. The media has pounded every aspect of the Bush administration for so long, like Clinton over time, we just don’t believe them or him anymore. We certainly don’t see him as popular or endearing. The MSM continues to lose subscriptions, viewers and credibility for the same reasons. Maybe they should be worrying about their own economy, what with the industries own financial crisis of lay offs,cut backs, declining advertiser revenew. Things aren’t as bad as they report it, good is reported as bad and bad is reported as any way they want, even sometimes as good. The MSM fails to do its job daily and often reports the news through the biases they hold, while failing to disclose to us what they are. How else can one explain the failure of the Seattle Times in reporting the fires set by the Enviromental Liberation Front on the street of dreams as anything but evil and an act of terrorism. Washington State and especially Seattle is as liberal as you will find anywhere in the country. So, you do the math, how will this story on a very liberal organization, E.L.F. be reported by a very liberal rag, the Seattle Times and others. Things can’t possibly be as bad as reported by the MSM. Did we not all learn very young, in the fabled story about “the boy who cried wolf” and the chicken that kept claiming “the sky is falling” that that doesn’t work in persuading others over a long time. The liberals with their biases and agenda with their willing accomplises in the MSM are today’s new fairy tale “chicken boy”. And 70% of us don’t believe in fairy tales, i.e., global warming, the economy is failing, evil is good, good is evil, etc.
The other day the Salt Lake Board of Realtors held a blood drive for the American Red Cross. As the phlebotomist began her process to draw my donation she asked, “Is now a good time to buy a home?” The answer was and is a resounding YES, without any doubt in my mind. In good, up markets or bad, down markets, a home is yours and is more than a dwelling place, especially if you plan to live there for more than a short while. You’re not renting, you’re not living in your In-Laws basement, and you own it. There are numerous tax benefits of home ownership. She and her husband are presently renters. She wanted to know how to go about looking for a home and asked what she should do next. I explained that most people in her situation do one of two things first. One, they may drive around looking for a new home in builder communities or search for an existing home in a selected neighborhood. Two, new home buyers may want to visit with a favored mortgage company to help determine what price point the home buyer may wish to shop. Either start works especially when the home buyer has a good handle on their finances and know what they are looking for.
Go shopping - Have Fun