Posted on August 28, 2008 @ 10:53 pm - Written by BawldGuy
I often make economists the butt of jokes. I remember one time a line by Johnny Carson. “If all the economists were laid on the ground head to toe, it’d be an excellent idea.” He didn’t think much of them that night. They want us to drink their own special recipes of Kool Aid, but don’t like it when folks notice they’ve predicted 13 of the last 4 recessions. That, uh, includes the recession of 2008 — yet another in a long line of recessions that never were. Yet since the last quarter of 2007, ya couldn’t swing a dead cat (pun intended — ya gotta read the linked post) in ‘Cable TV World’ without seeing a talkin’ head warning us of the recession around the corner. There were a couple who even had the cajones to say out loud and in public that we were already in one.
Makes ya wonder just how stooped some of them think we all are, doesn’t it?
The current and persistent real estate market correction has been the topic of debate since its birth some three years ago. I’ve seen this movie a few times before. I know the ending. Each time another sequel comes to theaters, the debates are similar. Most center around how harsh the correction will be, and when it might run outa steam. To that end, I ask you today,if you would do me the favor of reading a post published here almost exactly eight months ago.
It talked about real estate investing in 2008, and also included my thoughts on the possible life span of this correction.
I reread that post today. My thinking hasn’t changed. In fact, I’m more convinced than I was in January about what the last reel of this sequel holds for us. Plainly put, it’s my contention this time next year we may look back to the late summer, early fall months of August/September/October of 2008 as the time when the market began in earnest to execute it’s painstakingly slow U-Turn. Recoveries are like like emerging from recessions in that it’s only in hindsight that we pinpoint their beginnings.
I won’t go into detail tonight about on what hook(s) I’m hangin’ my ‘end of correction’ hat. Suffice to say the well known disclosure applies. My opinion, along with my heavily armed Starbucks card will get us coffee and cookies most days.
That said, what I thought was gonna happen has been playing out, more or less, since January. There are several trends which, when isolated may not mean much, but when seemingly choreographed with each other, can become powerful forces. Again, I’ve seen this movie, lived it actually a few times already. It’s my opinion the last reel is already playing on the screen.
We’ll see. Again, thanks for reading the January post. I’d love to hear your thoughts.
As I said back then, be nice, be respectful, and let it fly. Have a good one.
Posted on August 27, 2008 @ 12:16 am - Written by BawldGuy
Have some cool shots of our trip that I’ll disperse randomly tonight, and for the next few nights. Just so ya know. This first shot was ‘posed to be of two people, our hostess Vanessa, and me. Turns out it was two people, just not me. 
In Durango, Colorado as in San Diego, real estate values are way up the last decade, even after the steep decline of the last three years. If you can only afford a $400,000 home, the fact that the $600,000 place yer lookin’ at used to be $700,000 doesn’t really matter, does it? Hardly.
Same goes for income property. Read the rest of this entry »
Posted on August 17, 2008 @ 11:10 pm - Written by BawldGuy
Of course I have no empirical evidence of this contention. However, dealin’ with real estate investors for over three decades, I’ve been able to observe certain personality traits repeat themselves. One of these is the so called ‘maverick’ gene. You know, when I was in high school, you either loved the Beatles or the Stones. The ones who didn’t care what others thought, went for the second tier, so called ‘cuz they weren’t the Beatles or the Stones.
I liked the Beatles, but could take or leave most of their stuff. Same with the Stones. ‘Course, they both recorded songs that I still love today. Still, high school buds never tired of laughing at my musical taste — which they said was mostly in my mouth. Not so. I just had what Grandma always said was an eclectic taste in music.
Fast forward to the present, more or less. Unlike the Kingsmen who were almost the poster band for one hit wonders (Louie Louie), These guys have been around for years. Anyway, I like these guys. They do what they think is best and right, and let the chips fall, regardless of what others think. Read the rest of this entry »
Posted on August 15, 2008 @ 11:41 pm - Written by BawldGuy
At a family dinner tonight we had three generations at the table. We were at one of our favorite places, and were enjoying several appetizers. Grandma came up in the conversation as we were talkin’ about the Great Depression. The usual stories were told, but then my daughter asked me to tell her favorite Grandma story.
Here’s some perspective against which you can evaluate our current economic challenges.
In the early parts of the last century, the 1920’s, though history books tell us everyone was in the high cotton, bad times had begun for many areas of the country. We usually hear about the Roaring 20’s with the wild parties, and regular folks makin’ it big time in the stock market.
That’s true as far as it goes. Those in ‘fly over’ country were already gettin’ a preview of what was just around the corner. Grandma was the oldest of eight kids. Think it was like The Waltons? Think again. The story is short, and for Grandma ends up being about, of all things, shoes. But for me? It was always about perspective. Read the rest of this entry »
Posted on July 30, 2008 @ 11:47 pm - Written by BawldGuy
Here’s how I explain to real estate investors in other states what it’s like to trade equity from California to much lower priced growth regions.
It’s kinda like buying that killer Norstrom’s dress for yer wife. You honestly thought it was perfect for her. But after she stopped laughing, and could speak English again, you were back in the car, headin’ for a refund. Now, imagine you hafta spend the entire refund at the Dollar Store. That is what the CA real estate investor faces when he exchanges his properties’ equities to another state.
Take a Bay Area, San Jose (Palo Alto), or San Diego income property owner. We’ll use a San Mateo duplex. Let’s say it can sell for $850,000 and with a loan balance of $400,000 the net proceeds would be roughly $385,000 or so. If they paid $600,000 back in the day, their annual tax shelter runs in the neighborhood of $18,000 +/-. (Should be more, but that’s another post.) Their current cash flow is either zip zero nada zilch, or enough to treat the family to a monthly dinner at Sizzler. Oh boy! We’re goin’ to Sizzler!
Here is the ‘before & after’ picture when their 1031 tax deferred exchange has been successfully completed. Read the rest of this entry »