Monday, October 12, 2009
musings from El Viejo on several of our economies - The Future of the Economy in the USA will probably be discussed in catagories - some down some up
Hard to think in %’s. I think the average $300m home today was thought to be worth $450m by the owners. So they are waiting, some renting, and others are waiting to be processed out (forclosed.) Over the next 3 years the value could go down to $225,000….Then, yes 5% per year increase after that (2012.) How does that sound – from my economic assessment company – I am neither Case nor Shiller. One thing we have learned – those out front pontificating are wrapped up in their own “mechanics” of thought and prejudices. There are still few bargains out there – and there have to be many more – Inventory (supply) of private sellers (many who are putting their properties on and off the market – to avoid “spoilage”) We haven’t even reached the kind of “Pain Point” required to call a bottom…a real bottom unaffected by artificial stimulus (like $8000 for first time buyers) We are now seeing “Absolute” auctions (no price retainage) We will be seeing more – lots more…. The Corporate Builders have yet to face their biggest nightmare (who wants to live in a gated community?) Originally thought to keep the “unfit to own” out of the community – now “it is thought by many” Gated communities are gatherings of refugees – no one wants to live with.
After, what will be a Xmas, of market dumping (from old merchandise packed deep in the warehouses we will see storefronts (strip malls, etc) fold up – Drive in to return a movie to Blockbuster and find the store is empty – commercial property – will be the next “Dong” in this “Ding Dong” fall apart – with another round of major layoffs – who will pay their mortgages, utilities, Taxes, etc… the local governmental economic environment facing a “spending” and collection disaster – RECOVERY? Did I say enough? We are in the eye of the storm – quiet, almost pleasant and reassuring – and the second “things didn’t line up” wave – The need to have everyone have a safety net in Healthcare is ABSOLUTELY necessary – because the healthcare system has to remain viable during “disastrous” times. Why are the markets in “Recovery?” Because everyone wants the “eye of the storm” to continue in peace. The Real Estate Industry’s selling techniques have not changed, The Automobile Dealers haven’t changed either. Credit availability is on Vacation….Earnings Season is the “hope” before the storm – which should continue after earnings season is over….The Republican Party and supporters are acting in “surety” to enhance this failure. It’s going to be a very cold winter!