As I read the papers this morning, it appears that the one common theme is “in this horrible economy everyone is and should cut back, spend less, live less.” I say Bah-Humbug! There is little proactive advice about how to make things get better. The media has spun how the governments of the world have just injected Trillions (even Canada announced a $4B auto bailout for US firms) as a bad thing, it is not it an incredible vote of confidence in the future.
How consumer demand has now been pent up for over 19 months, again not a bad thing, it sets the stage for a great boom ahead.
How some first home buyers are snagging the deals of a lifetime on property, not mentioned. How real estate investors are buying ‘RTC on steroids’ type property deals, no one wants to brag about making big money right now.
The seeds of the last great economic boom came from the ‘last’ RTC give away. If history does repeat itself, these are the days that fortunes are made. Do you believe history repeats itself, or is ‘this time different’. Whenever I hear a mass of people saying ‘this time is different’ I remember the great loss I took in the dot-com bust – “everything is never different”.
The Bear has rolled over, and capitulated to the wolves. The Bulls left a year ago. Capitulation is the first step in any 12-step healing process.
Consider a couple facts: 1.) all the government money, will eventually bring inflation. 2.) real property throughout history is a hedge against inflation. 3.) the supply of new housing has been frozen for 18 months. 4.) It is unlikely that the supply of new housing will begin again anytime soon. 5.) the world’s population keeps growing at record rates. Demand rising, Supply decreasing, prices rising. Not complex math.
If you connect these dots, it is fundamental to conclude that at some point in the future (near) housing values will rebound, and in my (lonely) perdiction, will rebound much faster than anyone is presently perdicting. You will see double digit gains in housing values soon. The supply of ‘bank giveaway’ homes will cease sooner than late 2010 as many experts perdict. The banking industry is getting a handle on the flow of foreclosures, and reducing payments and amending/modifying mortgage terms at an unprecedented rate. This will allow millons to realize lower monthly payments than they signed up for.
Last week we refinanced a lady who said “wow! I’m saving $200/mo. Now I can buy a new car!” Now that my friends is economic stimulus and a sign of things to come. One of our bank partners told us that last week they took in $1 BILLION in new loan applications for refinance. Many of these people will see their savings in 30 days or less, and more than $200 a month.
You do the math. December 2001 was a pretty sad Christmas. It felt awfully similar to this year. We were all scared, waiting for the next terrorist attack. Wary of the massive economic blow to our economy. The only difference was Americans were acting like Americans – flying flags, smiling at neighbors and buying American products in a salute to our common goal of being winners not winers.