Monday Morning Coffee

Is the Stimulus just Delaying Another Housing Crash?

January 31, 2010

Good morning,

I hope you had a great weekend.  We had another week of fighting colds, but did manage to be fairly productive.  I was hoping to spend some time last week researching the issue of inflation vs deflation and appreciate the reports that many of you sent.  However, since two of them were over 70 pages, I didn’t get through everything.  I did find a couple of things that were interesting, one relating to the economy in general and the other specifically to the bail out.

The first was a one line quote that was so simple yet made a ton of sense.  It is often quoted that consumer spending is 70% of the economy (before the recent government stimulous).  Everyone is waiting for the consumers to start spending.  The author of this article made the point that “Consumers don’t spend.  Producers do.”  The point of his article was that consumers spent in the past because they could run up credit and use their homes as ATMs.  In the future, they are going to have to have jobs so they can pay down the bills from previous spending and then they will spend.  With over 10% unemployment (and those employed trying to pay down debts), the author’s point is it is unlikely that the 70% of our economy that is consumer driven is going to come back soon.

Relating to the bail out, an independant watchdog at the Treasury Department said that the $700B bailout might have stopped a meltdown last year, but have put us in a position for a larger meltdown as the companies that were “to big to fail” are now bigger and taking more risks because they know the government will bail them out.  Specifically in the housing area, over 90% of the loans originated lated year are backed by the government.  Which means if they fail, it isn’t private investors on the hook, but the US tax payer.  Based on the article, the only reason the market has rebounded is the massive government subsidies and tax breaks for mortgages.  It contends that once this ends, prices may fall to 8-10% below the lows of last spring.  Yikes – I think I’m going back to bed for another week.

I will spend some time this week to go through all the deflation/inflation reports.

We did have a productive week though.  We listed three new homes and put one into escrow.  In addition to the three new ones, I want to highlight one from last week again.  The homes:

Silent Short Sale – This is a 3 bedroom plus loft and office with a pool.  It is on the north side of 4S Ranch and we have one person interested in it now, but would like to have 2 or 3 to show this weekend.  We will take the best offer to the bank, so there is a chance to get a good deal on this one as it may go slightly under $700k.

5 Bedroom with a pool and a view!  We will be putting this on just after the Super Bowl.  Photos will be later this week, so I might have a site for you next Monday.  It is 3990sf and is in the Terreno development with a huge yard and sunset views.  It will be initially priced in the low to mid $900k range and is a truly unique property.

4 Bedroom Gated Community – This is a very nice plan 3 home in Garden Gate.  It is on the outside, so there is nobody behind it.  It is extremely nice inside and features the oversized island in the kitchen.  There is a full bedroom and bath downstairs.  This is a normal sale and will go fast.  We have not set pricing on it yet, but it is most likely going to go in the low to mid $600k range.

Short Sale Condo – A 3 bedroom in the Gianni complex across from Monterey Ridge Elementary.  The short sale may take some time, but if you are patient it is a good chance to get a 3 bedroom for hopefully under $400k.

 That’s it.  Enjoy the Coffee!  This one was sent to me by a client who just moved out of the area.  I was going to save it for a holiday, but – why wait.  Thanks to Shanzar for sending it to me.

Written by an Australian Dentist  

To Kill an American

You probably missed this in the rush of news, but there was actually a report that someone in Pakistan had published in a newspaper, an offer of a reward to anyone who killed an American, any American.  

So an Australian dentist wrote an editorial the following day to let everyone know what an American is . So they would know when they found one. (Good one, mate!!!!)

‘An American is English, or French, or Italian, Irish, German, Spanish , Polish, Russian or Greek. An American may also be Canadian, Mexican, African, Indian, Chinese, Japanese, Korean, Australian, Iranian, Asian, or Arab, or Pakistani or Afghan.

An American may also be a Comanche, Cherokee, Osage, Blackfoot, Navaho, Apache, Seminole or one of the many other tribes known as native Americans.

An American is Christian , or he could be Jewish, or Buddhist, or Muslim. In fact, there are more Muslims in America than in Afghanistan . The only difference is that in America they are free to worship as each of them chooses.

An American is also free to believe in no religion….. For that he will answer only to God, not to the government, or to armed thugs claiming to speak for the government and for God.

An American lives in the most prosperous land in the history of the world.
The root of that prosperity can be found in the Declaration of Independence , which recognizes the God given right of each person to the pursuit of happiness.

An American is generous. Americans have helped out just about every other nation in the world in their time of need, never asking a thing in return………

When Afghanistan was over-run by the Soviet army 20 years ago, Americans came with arms and supplies to enable the people to win back their country!

As of the morning of September 11, Americans had given more than any other nation to the poor in Afghanistan ….
The national symbol of America , The Statue of Liberty , welcomes your tired and your poor, the wretched refuse of your teeming shores, the homeless, tempest tossed. These in fact are the people who built America  

Some of them were working in the Twin Towers the morning of September 11, 2001 earning a better life for their families. It’s been told that the World Trade Center victims were from at least 30 different countries, cultures, and first languages, including those that aided and abetted the terrorists.
 So you can try to kill an American if you must.. Hitler did. So did General Tojo , and Stalin , and Mao Tse-Tung, and other blood-thirsty tyrants in the world. But, in doing so you would just be killing yourself . Because Americans are not a particular people from a particular place. They are the embodiment of the human spirit of freedom. Everyone who holds to that spirit, everywhere, is an American.

Have Great Week!

Scott Voak

858 688 0189

Monday Morning Coffee, Real Estate Market, San Diego Real Estate Market