If you had a million dollars to invest, where would you put it right now (under your mattress is not an acceptable answer)?   Well, you definitely would not want to put it in the stock market.   You know I’m going to say that real estate is safer and more secure in the long run, but do you know why?   I’ll give you two reasons, both of which are rock solid.

Reason No. 1.   Real estate goes up and down, but nothing like the volatility of the stock market, and your 401(k).   This past 12 months alone, individual investors like you have lost trillions of dollars in value in the stock market because of economic conditions.   I hear retired people saying things like, “My mutual fund is down 30%,” or “We are really worried that we’re going to have to go back to work again.”   On the other hand, a home that has lost 30% in value this year (down to $420,000 from $600,000) may have been purchased 15 years ago for $175,000 (as is the case with many people).   But that real estate is solid, and still an excellent long term investment.   As a matter of fact, in my area homes are only down 5% to 15%, depending on the precise location and features.   (more…)

Possibly Related Posts:

• Is A Double Dip Recession On The Horizon?
• Those Wall Street Tokers
• Cash is King, Stock is Not, Real Estate is a Buy
• Buy Real Estate For Your IRA Retirement Fund
• Words of Encouragement for the Real Estate Market and Economy

In every crisis there is opportunity, and for those hurting, maybe now is the time to consider that opportunity may help offset losses.   Cash is king in a crisis.   It always is.   There are tremendous opportunities in the stock market, but of course, none of us can be sure which stock that would be.   The risk is extraordinarily high.   But real estate is a buy, and the risk is a fraction of the risk in stocks.

By the way, there are two major industries that are going to take hits in this market:   1.) financial advisors and money managers, and 2.) real estate brokers and agents.   This is a no brainer, but watch for many offices in these two industries to close in the next six months.

There will be opportunities to pick up businesses in trouble or the stock of companies that are grossly undervalued, and there will be many.   One author, Jim Dines, said it well.

Possibly Related Posts:

• Is A Double Dip Recession On The Horizon?
• Those Wall Street Tokers
• Where should I invest my money now?
• Buy Real Estate For Your IRA Retirement Fund
• Words of Encouragement for the Real Estate Market and Economy

None of us bought tickets for the roller coaster ride we are all riding.   We’ve been going up and down and wondering if we are at the bottom yet.   I have words of encouragement for you.

We are near the bottom, but not quite there yet.   Before it gets better, it must appear to get worse.   The worse will come in this fourth quarter and the first quarter of 2009 when many economic government reports (employment, consumer price index, industrial production, business inventories, housing sales, new construction, interest rates),   and thousands of corporations report their quarterly results, including earnings reports ((There will be thousands of disappointing earnings reports.   For example, here is a short list of just next week’s report to come:   On Monday, Halliburton will report before the market opens, and Dow member American Express, SanDisk and Texas Instruments will be out after the closing bell.   Several Dow components will be out with results on Tuesday, including 3M, Caterpillar, DuPont and Pfizer, all of which report before the start of trading.   Tuesday’s late results will be headlined by Yahoo!, with E*Trade, Boston Scientific and VMware earnings also on tap.   Wednesday will bring another busy earnings day, with Dow components AT&T, Boeing, McDonald’s and Merck all set to report in the morning.   Also due early Wednesday are quarterly results from ConocoPhillips, EMC, Freeport-McMoRan, Philip Morris and Wachovia.   After Wednesday’s close, tech giants Apple, Amazon.com and Baidu.com will report, in addition to Sallie Mae and Amgen.   Thursday will bring earnings releases from Dow component Altria, Bristol-Myers Squibb and UPS in the morning, among others. After the close, Microsoft will headline the late reports.   Friday’s release calendar is considerably lighter, with Ingersoll-Rand and Ericsson   headlining the earnings reports. )), losses, and layoffs.   Meanwhile, there will be more companies going into convervatorships or filing for bankruptcy protection.

Let’s admit the obvious right now.   All of that news will be ugly.   We know it will be.   How does the stock market and consumer sentiment react to ugly reports from the public and private sectors?   Like a child in Kindergarten, the stock market always tanks with bad news.   I can guarantee this is true.   It always is.

And then, it comes back.   While I am not big on governement intervention, we do have literally trillions of dollars that governments around the world have committed to shore up threatened markets.   Many industries and segments of our economy will struggle, and some companies will be gone when the roller coaster comes to a stop, but we will not only survive, we will eventually be thriving again.

Be of good cheer.   We will be okay.   For now, you and I need to take a deep breath and say, “This too shall pass.”

Possibly Related Posts:

• As Interest Rates Increase Sellers Will Lose Money
• Is A Double Dip Recession On The Horizon?
• Those Wall Street Tokers
• Where should I invest my money now?
• Cash is King, Stock is Not, Real Estate is a Buy

The experts are confused.   Bank presidents, University economics professors, CEO’s running multi-billion dollar International companies, large fund managers, execs of the federal reserve banks, and even our politicians are totally stumped by the chaos in the markets.   Exactly what is happening and why?   A brief chronological review of the fundamental facts actually helps to answer the why.

The mortgage market crumbled, the result of greed, lax standards for income verification, and sub-prime lending.   Partly because of that, but also being steered by it’s own forces, the real estate market hit the biggest speed bump in decades.   Foreclosures overwhelmed the capacity of institutions to handle the administrative nightmare.   FHA was tasked with the responsibility to handle foreclosure workouts but congress has refused to provide the $65 million FHA needs to hire staff.   Could it be congress is preoccupied with bigger problems at the moment?

In a parallel universe, but intimately connected to the mortgage market and the real estate industry, the banking industry started cracking under the pressure of massive miscalculations and mismanagement.   A small crack in the damn started to get wider–let’s call it the credit crunch.   (more…)

Possibly Related Posts:

• As Interest Rates Increase Sellers Will Lose Money
• Words of Encouragement for the Real Estate Market and Economy

Real estate prices in Sequim and Port Angeles and throughout the Seattle area are holding up well compared to other investments, particularly the stock market right now.   USA Today published an article on October 8, 2008 entitled, “$2 Trillion Wiped Out of Retirement Funds.”   While this represents a 20% decline in retirement funds in a matter of weeks, the Northwest Multiple Listing Service data shows the average price of a single family home is down only 7.8% this September compared to September of 2007.

This is good news for home owners and for investors who are not over leveraged.   Again, we see that real estate is a solid investment compared to other retirement options.

In Clallam County, the third quarter of this year (July – Sept 2008) the sales of single family homes were priced as follows:

Comparing these numbers to last year’s third quarter (July – Sept 2007):

The median price this year is only down $25,500 from last year.   That’s real money, but it’s not a fortune by any means.   Days on market (DOM) are up, but not substantially for these sold homes.   [To weight the data for more accurate results, I eliminated the homes sold above $700,000, which represents a small segment of our market but can skew the data and the results.]

This should be encouraging news for those in real estate.   We are in challenging times, but we will get past this disruptive election cycle and the economy will stabilize, and we will get back to normal.

Possibly Related Posts:

• Port Ludlow Real Estate
• How Listing Prices Affect Offers
• Real Estate Without Offices
• Sequim Real Estate Broker – Attorney Still Giving It All Away for Buyers
• Top 20 Sequim Real Estate Posts of 2011

This year has been a tough year in real estate for sellers, but the problem goes far beyond the real estate industry.   Yesterday congress failed to pass a $700 billion dollar bail out package for financial institutions, and the Dow Jones Industrial Average lost 777 points, the largest single day crash in history.   The Wilshire 5000 recorded a paper loss of $1 trillion dollars yesterday.   The Feds recently took over Fannie Mae and Freddie Mac, holders of 70% of the mortgages in the U.S.   WaMu bank files bankruptcy, the largest bankruptcy filing in history.   [Note added Oct 9, 2008:   Since the start of the year, investors have removed more than $81 billion from stock mutual funds according to the New York Times.]   And there is much more to come.

What does all this mean?   (more…)

Possibly Related Posts:

• Is A Double Dip Recession On The Horizon?
• Those Wall Street Tokers
• Where should I invest my money now?
• Cash is King, Stock is Not, Real Estate is a Buy
• Buy Real Estate For Your IRA Retirement Fund