Market News & Commentary by Chris McLaughlin, January 27, 2009
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More millionaires are created during times like these than any other time … so are you ready to make it happen? If so, be one of the 8 spots that we have left for our webinar TONIGHT at 8:30 PM EST / 5:30 PM PST entitled “Recession Proof Real Estate Investing: How to Buy Property with no out of pocket costs!”
The link is right here, so jump on this now:
https://www2.gotomeeting.com/register/323668815
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In real estate related market news today…
Home prices dropped by 18.2% in November versus the year ago period, accordingly to the Standard & Poor’s/Case Shiller index. The index also shows the impact of a declining market: since August 2006 prices have dropped every month for a combined total of 28 consecutive months. “The free-fall in residential real estate continued through November 2008,” David Blitzer, Chairman of the Standard & Poor’s Index Committee, noted in a statement.
And more media scrutiny has forced some Citigroup executives from traveling in a new fancy jet, eating bon bons and sipping champagne as they jet set to find out where their next bailout will come from. Citigroup received over $45 billion in capital from the government TARP funds, but it still planned to purchase a Dassault Falcon 7X for a cool $50 million. The bank originally said that it would pay for the purchase of the new fancy jet with the sale of older aircraft, but reversed course quickly and said the purchase won’t happen after media attention and Senator Carl Levin of Michigan raised a stink. Levin, who represents many of the nation’s automakers, blasted the idea: “To permit Citigroup to purchase a plush plane — foreign-built no less — while domestic auto companies are being required to sell off their jets is a ridiculous double standard,” Levin said. Well put, Senator Levin!
Now, on to our real estate investing section…
Future History
If hindsight is 20/20 then it should come as no surprise that we often like to take a quick walk down memory lane; after all, those that do not learn from history are doomed to repeat it…or so they say. As the first month of 2009 comes to a close, it’s only natural to wonder what the rest of this year will have in store and how it will come to be remembered in the history books in years to come. Here are a few solid guesstimates with implications for short sale investors today and tomorrow…
- Undoubtedly President Obama is likely to make it into the history books not only for becoming the first African American President in the history of the nation but also for whatever transpires during this term. Faced with two wars and one of the worst economic climates to strike the nation since the Great Depression, the challenges are very real. Savvy short sale investors would do well to take notice of Obama’s intended tax rate restructure plans which could dramatically increase income taxes for those in the top brackets. With FICA/SS taxes already at record levels, additional increases would undoubtedly make passive income more attractive than ever. Close attention to future changes to Capital Gains, passive income and other categories will become very important to long term planning.
- Housing Starts – Stopped. A recent report by Bloomberg news shows builders have all but stopped building; shares have plummeted 76 percent in the past few years with small builders going bankrupt at unprecedented numbers. Unfortunately, once builders stop building and go out of business, it takes quite awhile to get things rolling again once the recovery is underway. With the bankruptcy and dissolution of small builders, banks and even nationwide builders there will be few remaining entities left to pick up the pieces once confidence is restored and the current inventory is depleted. When historians look back to discover the root of the future housing shortage it will be traced back to the current excess inventory and financial failings taking place. Savvy short sale investors should take note and plan to provide housing once excess inventory is absorbed.
- Back to Basics. After years of big living and conspicuous consumption, 2009 is likely to be marked by a return to the basics. Basic housing, good old fashioned entertainment, friends and family…the essential of life. Short sale investors should take note and plan to purchase safe, affordable housing with an emphasis on good schools, good churches and good neighbors. It’s a recipe for success.
See you at the top!
Chris McLaughlin
http://www.shortsalesriches.com/welcome.html
P.S.: It really isn’t as difficult as you might think it is … but it all starts with TAKING ACTION. If you want something that you never had, you need to do something that you’ve never done, right? So forget all the negativity, and forget all the turmoil. More millionaires are created during times like these than any other time … so are you ready to make it happen? If so, be one of the 8 spots that we have left for our webinar TONIGHT at 8:30 PM EST / 5:30 PM PST entitled “Recession Proof Real Estate Investing: How to Buy Property with no out of pocket costs!”
The link is right here, so jump on this now:
https://www2.gotomeeting.com/register/323668815
Copyright Loss Mitigation Institute 2009.
All Rights Reserved.
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Finally, a blog for Real Estate professionals
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid flipping of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner and Supervising Broker of one of Florida’s
largest Real Estate firms, running 5 different
offices, supporting nearly 500 agents, uniquely
positioning him to help thousands of investors
make money in the biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
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{ 4 comments… read them below or add one }
Re: “Senator Carl Levin of Michigan raised a stink. Levin, who represents many of the nation’s automakers, blasted the idea: “To permit Citigroup to purchase a plush plane — foreign-built no less — while domestic auto companies are being required to sell off their jets is a ridiculous double standard,” Levin said. Well put, Senator Levin!”
Hey, when did Senator Levin get voted to the Citigroup board of directors? When the Citigroup board of directors decided that they were inept and didn’t know how to manage the company.
There is a whole host of problems with this whole bailout strategy – but, fundamentally if you are a publicly held company and come to the federal government for a handout, the government now owns you.
And, regardless of how much bailout money the company gets, the federal government now has a much greater voice in the company’s policies, planning, and direction than someone with voting stock or a capital position. We’ve seen this happen all too often.
But if you need a clearer picture of federal management and what happens when the federal government intervenes, look at the public school system and the condition and quality of our kid’s education. We cannot afford the federal government to usurp the responsibilities and accountability of the board of directors.
We are seeing the trend toward nationalizing (federalizing) anything that is on the brink of failure regardless of its long term value or usefulness. Propping up companies that would and should otherwise go under in the name of “they are just too big to fail; it would be devastating to our economy” absolutely shortsighted. Perhaps there is a period of “devastation” for the short run and for those intimately involved, but, if we use more than a 90 day planning horizon, we would never consider such foolishness.
Somewhere along the way, we lost the bubble on the fact that there is a business cycle and that is there for a reason: Correction!! At some point, everything needs to correct. We see the housing market go completely crazy for several years as investors looked for places to put their money from the previous business cycle – the dot com bust of 2001. This is the way new developments happen.
If the markets don’t have a natural, undaunted way to off-load excess infrastructure, inefficient practices, and failed businesses then we will not continue to have the huge leaps we’ve enjoyed in technology and life style.
This bailout is an absolutely dangerous precedence and if not arrested, will be our demise as a democratic republic with a free market society!
The questions for today are: Where does this end? And what is to stop the federal government from carte blanche taking over public or private companies or even industries that they don’t believe are being operated properly, efficiently, etc?
We are on the verge of being reduced to a 3rd world country. We have fought wars to push back the very scourge that we are allowing to happen without a bullet fired. And, people like Senator Levin, with a political or social motive, are all too happy to take a seat on the board of this blight!
That is why I don’t worry abou the bailout my frined. I just close deals. Economy is screwed for awhile but I’m not the least bit worried becuase I position myself so it doens’t matter. THere is going to be a HUGE redistribution of weath ober the next 5 years. Anyone reading this who thinks following all the traditional rules like a good little citizen is gonna get you anywhere in this economy is WRONG! You need to think outside of the box people!. Hmmmm lets see here everyone is in foreclosure and realtors hate doing short sales…. how can I make money off of this problem to creat a win win for everyone? That is the kind of thinker you need to be!
Nathan, I can’t disagree with you more about your outlook. It is way too narrow and doesn’t speak to the long-term economic and social aspect of this country. I know you are all about cashing in on the moment. But, if you don’t look at what devastation we are going to faced with in the future then where is the big picture win-win? As someone with kids your age, I feel sorry for what they will be up against.
Food for thought: How long do you think you’ll be able to practice in a free market if you don’t have control over the transaction?
Hap
So Hap,
What are you going to do about it? Write on some guys blog to change the world? Tell me your plan. I do have control over the transaction. I’m not quite understanding how I don’t have control over the transactions. If the market gets better I will adjust my strategies, if the market gets worse I will adjust my strategies. Doensn’t matter either way to me. I obviously would prefer it get better for the good of our nation but I’m not the messiah. Anyone that does not have that mindset can go take a number and stand in line a mile long to get their free “victim welcome package”. We have no more room for these people.
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