No, Joe - Say It Ain't So!

I watched an interview with Sen. Joe Biden on Public TV this evening. I like Sen. Biden because he is like a pair of old shoes and a flannel shirt - he is just a comfortable guy. He'll talk with you like he is an old friend, even if you have never met.

I was confused by his plan for the economy, however. He would like to do away with tax cuts for the ultra-wealthy, stating that it would put a trillion dollars into the economy. I was kind of thinking that if the government collected an additional trillion dollars, then the government would have an additional trillion dollars, not the economy. I believe in the premise that our economy is driven by the consumer, not the government. Taking a trillion dollars away from the consumer, ultra-wealthy or otherwise, would seem to work against the economy, not in its favor. Just a thought.

Oh, I understand that the government could use a trillion dollars to create government jobs, which in turn could impact the economy. I also understand that it could go to the Department of Education to provide scholarships and grants to pay for educating deserving young men and women. The problem with that, however, seems to be that those jobs and those educations never seem to improve the operation of the government itself. If those jobs were of a professional management nature and those education dollars were paid back by government service, then we could truly benefit. Let's face it folks - bright young men and women do not go get their MBAs to go into the government to manage. They go forth into business to make big money and become the ultra-wealthy.

So . . . if that is the predictable outcome, why not leave the trillion dollars with the ultra-wealthy in the first place and let them buy expensive homes, vehicles, toys, travel, etc. that create jobs for thousands of people and stop trying to believe the government can invest the money in a better way. Sometimes you have to leave well enough alone, even if it provides one less discussion point for the next cocktail party.

Real Estate Investment Window Opening

Several times in the past week I have heard comments from some very sharp folks that the window for real estate investment is starting to reopen. By way of background, real estate investors withdrew from our Twin Cities market over a year ago. Surprisingly, that constituted almost 25% of real estate Buyers in the area. Naturally, with that many Buyers out of the market, inventories have risen dramatically and prices have been forced down due to lack of demand.

With bargains for Buyers on nearly every street in town today, investors are starting to take notice. Couple that with a sudden instability in the stock market and you have a perfect real estate buying storm. Savvy investors are poised to take their gains on stocks and return to real estate. That will occur over the next 12 months, some returning earlier than others.

What does this mean?

As this investor tide returns, prices will stabilize and once again start to climb. Inventory levels will decline. The 10.5 homes currently available for each Buyer will decline to 5 or 6. Buyers over the next 6-12 months will likely see big gains on their real estate investments within a few years. Like all investments, real estate needs to be held for a few years to maximize the gain - few get rich quick schemes ever really materialize.

Stay tuned.

Bottomed Out in 3rd Quarter?

A new housing outlook was just published this week by the Senior Economic Analyst for the National Association of Realtors. It indicates that 3rd quarter of 2007 represents a 5% drop in existing home sales (the largest segment of the housing market – it excludes new construction) from the previous quarter. Further, it indicates a steady, slow increase each quarter going forward all the way through 2008. 4th quarter of 2008 existing home sales are estimated to be equal to 1st quarter of 2007. This forecast, therefore, leads us to believe that housing consumer confidence will return sometime during the October to December 2007 timeframe and move forward cautiously through the next year. I’ll keep you posted as I know more.

Foreclosure Rates Examined

I heard a news clip today regarding the alarming rate of mortgage loan defaults and late payments due to our subprime lending crisis. The clip stated (I believe – I was multi-tasking at the time) that 13% of the mortgage loans in America are subprime and 15% of those are in foreclosure. If my math skills have not totally escaped me, 13% times 15% is about 1.95%. So . . . .the news hype is about 1.95% of all the loans out there being in foreclosure? I understand that the 1.95% could become a full 13% and yes, that sounds pretty scary. I do suspect, however, that 100% of the subprime loans will not reach foreclosure. The clip further stated that 97.4% of Americans make their mortgage payments on time, which sounded great to me. Nothing here gave me any cause to be alarmed. I just wanted to share. Have a great weekend.

Slow News Day?

It must have been a slow news day today. I cruised through the CNN website and snuck a peek at the politics section. The top headline under "Political Ticker" read:

Sen. Craig hires Michael Vick's attorney

Well if that isn't big news, I don't know what is. Sheesh. We are doomed.

Peace.

No Education for Illegal Aliens?

As you recall from previous postings, I am a news junkie. I caught a bit of a story this week that struck me as odd. It seems that the State Legislature in Virginia is proposing that illegal aliens not be allowed to attend State Colleges there, the rationale being that other deserving students are not able to make the acceptance cut because of a limited number of slots available.

In the world of real estate, we have offers and counter-offers. In keeping with that spirit, I have the following counter-proposal. I propose that since the State of Virginia knows who their illegal aliens are and apparently where they are, that they contact Immigration & Naturalization Services and inform them that they have illegal aliens. Further, they should request that they be rounded up and escorted back to their border of origin. It would seem that this strategy would demonstrate a State comprised of law abiding Americans that are interested in doing the right thing.

Complicating this common sense approach by introducing a bill, debating its merits, passing it in the legislature and sending it off to the Governor for his veto (yes, Virginia, your Governor is opposed to this - he has no problem with illegal aliens attending State Colleges funded by your tax dollars) is pure folly. It may raise the notoriety quotient for some State Legislators, but is that necessary? Is that what the constituency is paying for? Keep it simple:

Make the phone call - INS Agents are awaiting your tip!

Mortgage Tax Deduction Targeted

In the category of a really ill-conceived idea, this comes from Michigan:

"Rep. John Dingell (D-Mich.) recently confirmed his plans to roll out legislation in September to wipe out an existing tax break for owners of large houses. Under the measure, owners of residences measuring 3,000 square feet or bigger — as many as 8.6 million residential properties nationwide, according to 2003 federal government data — no longer would be able to claim a tax deduction on mortgage interest. Dingell's aim is to discourage wasteful energy use and help curtail pollution tied to climate change. But housing industry officials warn that the current slump in the sector makes now a particularly challenging time to tinker with the deduction." Source: Deseret Morning News (Utah) (08/27/07)

A challenging time to tinker? There is no good time to tinker with this deduction at all. If Congressman Dingell were at all concerned about wasteful energy or pollution, he might want to look at the major product of his own State - gas-hogging, air-polluting land yachts. Perhaps he could influence the manufacturers in his back yard to produce more fuel efficient, pollution-free products instead of playing with taxes. Japanese car manufacturers proved years ago that the American public will buy quality, fuel-efficient vehicles all day long - Congressman Dingell and his constituency just missed the message. Many large homes (and virtually all new homes) have modern, energy conserving systems engineered into them, resulting in less energy consumption than older homes half their size. The Congressman is way off base here.

Congressman Dingell has suggested in the past that energy conservation legislation not get bogged down in discussions about miles per gallon. Of course not - that would actually have a positive impact upon energy conservation. Instead, he would eliminate a program that helps put families into homes. Enough silliness. Perhaps over 50 years (yes, over 50 years in that office) in Washington is enough?

Anti-Shiver Device, Doggy Style

Some time ago, I promised to post pix of our baby from time to time. Here is one of my favorites from last winter:

She was pretty small at the time and shivered miserably on walks, so one of the boys' sweaters knit by grandma in Russia really did the trick. She is now up to 50 pounds, so the cold-weather shivering is much less of a problem, but she has certainly outgrown the sweater! Where is grandma when you need her?

Home Loan Market Update

This just in today from Kathy Harrison at Bell Mortgage (FinancingHelp.com) in her weekly "Market Watch" newsletter:

"Interesting Notes - To date - Over 120 mortgage companies have closed their doors due to reduced liquidity. The result - borrowers who want to take out non-conforming loans have fewer, more expensive options. Many media outlets have incorrectly added fuel to the fire by stating mortgage lending has stopped altogether and borrowers can't get a loan without 20% down payment. - not true. Conforming rates actually may see the loan limits raise in the near future. Fannie Mae and Freddie Mac are talking about that right now so that may help our market. In addition rates for conforming loans have actually improved. The Fed is looking likely to cut the Fed Funds rate which would affect prime and could have an impact on home loan rates in the September Meeting. All good news."

Kathy has over 25 years in this industry and is well worth listening to. I'll keep you posted with other insights from time to time.

Value of You Tube Realized

The success of the CNN You Tube interviews (NOT debates – just interviews) showed me some value for You Tube – value that I had overlooked to that point. It took the concept of a town hall meeting national and could easily have been conducted internationally (the United Nations could benefit from the experience). Up to that point I felt that You Tube promoted dangerous behavior – causing people to take risks for the sake of becoming a “most watched” video to some end that I could not grasp.

The particular benefit, to me, was the ability of the common citizen to get a common sense question / concern / issue out on the table in front of millions of others, and to hear the nomination wannabes ad lib answers instead of delivering rehearsed speeches in response to predictable media-prepared questions. It was refreshing, down to earth and well, just plain real. I look forward to more use of this technology in a variety of applications that could benefit the masses.

I also look forward to the eventual narrowing (or elimination) of the field of nomination wannabes so that the interviews can transition to true debate (or agreement) among the real candidates.

Put An End to Their 15 Minutes of Fame

For a moment, let's rethink embedding the media into the war in Iraq.

In World War II, journalists were actually a part of the military service (rifle in one hand, camera in the other) and film would make it's way back stateside eventually, typically shown before movies in the theaters. In Vietnam, network journalists got their stories and film out quickly - we actually saw the previous day's activities on the next morning's news. During the Gulf War, we sat spellbound watching live theater from Kuwait hotel tops - Scuds being shot down by Patriot missiles with commentary by cable journalist Wolf Blitzer.

So now we go off to war with civilian cable and network journalists assigned (embedded) within specific military units capturing the action from the trenches. This is an odd strategy at best - I would prefer our soldiers focus on the enemy rather than protecting the journalists - I believe that is what our tax dollars are intended to do. I, for one, did not check a box on my tax return last year to designate a portion of my taxes to protect a journalist with military resources so that he/she might sensationalize a story to enable their cable/network employer to charge more money for advertising and influence my buying patterns. Whew - that was a mouthful, but I hope I made a point.

But wait - we aren't fighting a traditional army this time. The enemy is a culture - a culture of terrorism - not an army dressed in uniform carrying a flag. Instead we are faced with suicide bombers - folks with explosive devices strapped to their bodies or cars who have pre-recorded a farewell message to their heirs as they go off to commit suicide, all to have their sponsors pay a life insurance benefit to those very heirs under the veil of performing some heroic act.

I have visited, lived and/or worked in 10 countries on 3 continents in my life - not a bad cross-section of humanity - and I am here to say that this is insanity. Our media is providing, on a real-time basis, 15 minutes of fame for folks committing suicide for hire. Listen, folks. Really - stop for a second and listen. If we were to dis-embed the media and take away the opportunity for 15 minutes of fame, don't you think there would be the possibility of seriously reducing those suicides - those senseless acts that take the lives of undeserving, peace-loving Iraqis and their defending soldiers as well? Stand up - be heard -

DIS-EMBED THE MEDIA & SAVE SOME LIVES!

Isn't it at least worth a try?

Why Do We Change Oil So Often?

Okay - the simple answer is to minimize engine wear in our automobiles and make them last longer. That is at least easy to rationalize. However . . . . do you remember when . . .

-- Auto manufacturers recommended oil changes every 5,000 miles?

-- Technology & quality improvements caused manufacturers to raise the 5,000 to 6,000 miles?

-- More technology & quality improvements caused manufacturers to raise the 6,000 to 7,500 miles?

Well, I do. It was called the '60s & '70s. So where did we go wrong in this country? It is difficult to imagine that we have worse technology & quality today than we did in the '60s & '70s - don't we purport to be world leaders in technology & quality? That being the case, why are we now pushed to change our oil every 3,000 miles? If we went back to changing oil at 6,000 mile intervals, how many fewer barrels of oil would we need to import? Really - think about it -

HOW MANY FEWER BARRELS OF OIL WOULD WE NEED TO IMPORT?

I'll just let that question linger without an answer - but please do think about it. And while you are at it, think about this one, too:

WHY HAVE WE CHOSEN TO BE A WORLD LEADER IN OIL IMPORTS INSTEAD OF TECHNOLOGY & QUALITY?

Who is gaining through this choice? The general American public? I think not.

Guatemala Finale

For those of you tracking Taylor's mission trip to Guatemala, her group arrived back in the Twin Cities on Sunday the 24th. She left a 16 year old, wide-eyed girl just a tad apprehensive about leaving the country for the first time. She returned a 17 year old young woman, filled with self-confidence and ready to conquer the rest of the world. I offer this as fair warning and yes, to brag a little. She is terrific and thankfully home safe. Here she is with a few of her new friends:

Stay tuned for next year's adventure - I am pulling for Budapest - who knows.

New Taylor Update From Guatemala

Some of the east coast branch of our family has been checking in on my daughter, Taylor, and her mission trip to Guatemala. She is part of a service team that has been involved in building construction, repair and now plumbing. Here is a picture of her team after moving 400 cement blocks down the mountain so the locals could set the block on a house for a widow with 5 children. They look proud, not to mention DIRTY!

Today's blog posting from Guatemala:

"Hola Madre, Padre y mis amigos!Yo soy Taylor! How lucky are you guys two messages in one day! Today me and Jeff left the group and drove to put in the water systems! Little did we know it was an hour and a half drive and we were going to be in the back of a pick up! Thank you lord for Dramamine!! We had a ton of fun and at points we were above the clouds it was so beautiful! I took probably more than 20 pictures of the clouds and mountains it was so fun! We were only an hour and a half from Mexico but we didn’t go even though we’re telling everyone we did! I am having so much fun and really taking advantage of this once in a life time opportunity! My home stay is ok I hate the food I almost threw up like 3 times at breakfast but I tried everything! We had steamed milk, with grits in it and some brown stuff plus cereal all in one bowl! Then we had plantains and it was awful to the point where I had to put a dinner roll in my mouth to choke it down! Other than the food I guess it’s ok but I can’t understand my people! I love you all and I’m not sick yay! I hope I can make it through the whole trip without being sick but who knows I’m just glad for making it okay thus far. I love and miss you all so so so much!"

This is such cool stuff - I just had to share. Peace!

SW Metro Twin Cities Market Update

From time to time, I like to report on market conditions in my backyard, which is the SW Metro Transit service area, encompassing Eden Prairie, Chanhassen and Chaska.

Reviewing data through May 2007, we see that closed sales in this area are down about 20% from the same period a year ago. Further, inventory of re-sale homes on the market is up from 2006. The increased inventory is fueled by lagging sales, i.e. - although the rate of new listings coming on the market has slowed, sales have slowed even more. The average market time from listing to contract acceptance in this area has been 141 days thusfar for the year. That number will rise steadily if inventories continue to build.

This is clearly a Buyer's market, so . . . . where are the Buyers? Faced with rising interest rates, shouldn't Buyers be scooping up bargains?

Sellers must be patient and consider market changes on a real-time basis to enhance chances of a timely sale.

If you have any questions about our market, please contact me. I can also provide similar perspectives on other Twin Cities metro municipalities. Thanks for being there!

Guatemala Story - New Update

My daughter, Taylor Ann, is doing fine in Guatemala on her mission trip. She posted living proof earlier today:

Yep - that's my Taylor. Here is some evidence she is actually learning some handy life skills:

Okay, so her big work partner has a big shovel and Taylor has a tiny trowel - big deal. She did help transport 200 or so bricks to the orphanage construction site, too. Just workin' on her biceps!

Here are a few of my favorite quotes from Taylor's new posting:

"I’m doing great. I haven’t gotten sick yet and I am trying all of the food, well, except for the beans!"

"We work so hard on the service team I have a ton of scratches and bruises! Today we’re going to work on the house for the widow and her five kids! I’m really excited to participate in the building of that house!"

" [We] found a pig by the church! It is one of the people's in the town. I asked the little boy if I could have it, but he said it was his mom's! He told us it didn’t have a name so we named is Spencer! I’m in love with it. I want to bring him home he's really little - maybe a foot long!"

"Yesterday we shaved our legs in the rain we got drenched but it was a blast!"

Well - all for now. As you can see, Taylor has a way of finding her own path wherever she is, whoever she is with and whatever she is doing - one big bundle of fun. I am very proud of her for sharing her special gifts with the world.

Government at Work

Sometimes our tax dollars work harder than others. Here is a great example of government with a sense of humor.

I learned long ago from a former employee that it takes fewer facial muscles to smile than to frown - wrinkle prevention is just a smile away! Have a happy moment!

Parental Pride Coming Through

Hello, all! I just have to post this. I am very proud of all my children and will occasionally share something special. Had I started blogging 30 years ago, I would no doubt have thousands of such things to share about all my "gifts".

This one is about Taylor. She has a tradition of going on a mission trip each year right after school is out. 2 years ago she helped rebuild a hiking trail at a camp in Colorado. Last year she worked in a homeless shelter in Washington, D.C. This year, after 4 years of Spanish, she decided to head south. She left Sunday the 10th headed for Guatemala where she is helping build an orphanage. Here she is giving a testimony of her faith at a special church service after their arrival (Taylor is in the middle):

Her entry in their blog today went like this:

"Hey Mom, Dad and friends, it's Taylor. Wow - we have already done so much with these people! The kids here are so loving the whole drive up this mountain the kids would chase after our bus and wave to us with such joy for they know how much we Americans can do for their city! The kids cling to you and just are so excited to be with you! Last night we had a 3 hour church service we presented the mime and we did a puppet show for the kids! We also got to see how they worship God - it was amazing! I also had the chance to be the first one to share my testimony. I read it in English, Josh translated it into Spanish and then their pastor translated it into Ceche! It was amazing. I love listening to people speak Spanish! Now we’re off to do some service work I’m excited to see what we will be doing in this community to help better them! I miss being home and I miss all of my friends, but I love you all and I’m doing well! With much love, Taylor"

If you want to follow along with her trip, her group blog is here:

http://www.operationcentralamerica.blogspot.com/

All for now - I just needed to share. Thanks for reading!

Man Is Not In Charge Of The Rainforests

Odd headline. Perhaps. More odd is the notion that man is the sole enemy of the tropical rain forests, or rather that the actions of man are the sole enemy of the rain forests. Ann McIlroy of the Toronto Globe & Mail recently wrote an article about some British research underway that included this clip:

"Early humans didn't start out walking on all fours like gorillas and then slowly straighten up, a team of British researchers says. Instead, our ancestors became two-footed while nimbly traversing tree branches in search of fruit. When ancient rain forests began to thin out, they jumped down from the trees and started walking on the ground."

Although the article, and indeed the research, is not about the rain forests, I found the reference to the thinning rain forests noteworthy as it describes a period of history that pre-dates man. Face it, folks, Mother Nature is rarely influenced by man and whatever her plan, she will execute it her own way and on her schedule, including her occasional thinning of the rain forests. Let's just deal with it - humans like to believe they have great influence on the plan, but are not always to blame for everything bad that happens. If, however, you want to believe that they are, do not blame it on being left or right of the political center - those you choose to blame are more likley not involved and it has never occurred to them to care.

And . . . . while you are contemplating this provocation, I will be kicking back observing the magic of Mother Nature - yes, it is magic to me as a human, regardless of whether I perceive it as good or bad. Peace.

Introducing The Baby

I can give you a hundred reasons for my hiatus from blogging over the past couple of weeks, none of which will satisfy my loyal readers, however. Thank you for hanging in there with me. It occurs to me that some additional regular features might be a way to manage my blog content a bit better - gotta have a system, you know! So, it is time to launch the Nikki-Watch!

Nikki is the youngest member of my family, having just turned ONE! She is an American Boxer according to her papers, but we are quite certain she is part human. Her full name is Nikita Latifah Guadalupe, courtesy of my teenage daughter, Taylor Ann. Here is the first picture of Nikki that we ever saw, courtesy of the breeder's ad on the Internet, which was the impetus for us to hop in the car and go get her:

I will post additional photos of Nikki from time to time, chronicling her life with us at the Foster household. You will be able to click on the "Nikki-Watch" label for postings and get all those related to Nikki at the same time.

I'll catch up with you all again soon.

Home Prices – Interest Rates – Affordability

As a real estate professional, I spend a lot of time studying home market trends and listening to industry analysts. Although I may not agree with much of what I read, mostly due to general national data versus local market data, I like to share market outlooks from time to time and give credit to their source. Here is one I came across last week from Bill Gross, Managing Director of PIMCO, in his April 2007 Investment Outlook newsletter:

“ . . . if home prices in the U.S. have peaked, and are expected to stay below that peak on a real price basis for the next three years, then the Fed will cut rates and cut them significantly over the next few years in order to revigorate an anemic U.S. economy.”

On the surface, it looks like a prediction of lower home loan rates over the next few years – even lower than the existing historically low rates. Or . . . does it indicate that rates will remain the same and that home prices will decline. Or . . . well, you might see some lack of strong outlook that you can hang your hat on here. No matter what direction the housing sector might turn, the statement works. The bottom line is this – first time homebuyers should not be shy about jumping into the housing market. Interest rates are low. Available home inventory is high. And regardless of the future, near or long term, the tax benefits of home ownership in America are unparalleled in the world.

Oh – and I certainly do not want to overlook the move-up homeowners. Even though the sale price of the home you are currently in might be depressed, so is the price of the home you will be buying. The net difference between the two will be relatively the same even if the market starts to recover. As such, now is very likely as good a time as any to make your move - your choices for a next home are aplenty.

All for now. Hope all is well in your world.

Promotionally Weary

It seems to me that I might be better off not opening mail, reading e-mail, watching television or listening to the radio because I am increasingly tired of being presented offers for cable telephone, digital this & that, trash collection, etc. that lead with a price tag of $29.95 for the first 4 months. So . . . . have you ever read the fine print to see what the payment is for month 5 and beyond? More often than not these days I am unable to find any reference at all to what the future payment might actually be. It is not that I am interested in the offers, but rather that I am offended by the tactic to lure unsuspecting consumers into the lair of “only” $29.95 a month. Full disclosure by the offerors should be mandatory – frankly, I assumed that it was. I guess that makes this an open letter to all Attorneys General across the country – please protect the consumers in your jurisdiction and leave your respective States a better place when you step down from office.

There – I let that one go – blogging is healthy for my soul. Peace.

Recollections - Savor Each Moment

It has occurred to me often in recent years that even a nondescript moment in my life may have been a lifetime memory for one of my children. How do I know this? Well, quite simply, the realization hits me whenever I am approached by one of the kids with, “Hey, dad – remember when I was 7 years old and I did such and so and you immediately said this and that? Wasn’t that hilarious?” In fact, I often do not have such a recollection, but it clearly made an impact on a child.

I guess what I am rambling about here is that children are a gift to us as parents and the more lifetime memories we can create with them, the better. Even better than that is sharing and reliving those moments together over their maturing years. My kids will likely replay many of those moments in the form of a eulogy for me someday as we did with my father last year, but I am speculating that it might be difficult to listen in on the conversation. As such, I savor each moment of recollection they want to share now with a smile in my heart. I am thankful for my gifts. My advice to any parent is to savor your moments, too.

I Didn't Know That

I occasionally jot down interesting facts when they get my attention. Here is one I learned today.

What is the NUMBER ONE beer-consuming country in the world?

Germany? Ireland? USA?

Nope -- it is now China, up from 33rd in 1980. That should make the world a smaller place during the 2008 Summer Olympics in Beijing. And you heard it here, folks. Stay tuned.

Turn, Turn, Turn

It was with profound sadness yesterday that I watched the details of the horrific events at Virginia Tech in Blacksburg unfold. This sadness grew from personal memories of my dorm room on the 6th floor of then brand new Ambler Johnston and my classes in Norris Hall some 38 years ago.

My personal emotions ran from outrage at the events themselves, to thoughts of the irreplaceable loss of young life, to wonder if there had been signs overlooked that could have prevented the events and, of course, how anyone could even conceive of committing such heinous acts.

Although depleted over my many years on this Earth, I offer the family and loved ones of the victims and to every resident of the Blacksburg community all of my courage, strength, and energy to help them heal in this time of great adversity. May God shed His grace on you all.

A time to build up, a time to break down
A time to dance, a time to mourn
A time to cast away stones, a time to gather stones together

Take Gasoline Tax Away from the Highway Department?

Why is gasoline over $4 per gallon in California? Every time I visit there, I see oil wells pumping, refineries refining and storage tanks overflowing. So what's the deal? Is it as simple as high demand in spite of low production costs? If so, when will the lights come on and a change take place? Uh-oh - Bill is starting to lose it again. Radical political ideas.

How about if we take gasoline tax revenues and not use them to build and repair highways? Oops - that would ruffle some feathers. Instead of feeding the highway system to increase auto traffic and pollution, let's use gas tax revenues to build people movers like Disney has demonstrated for over 20 years.

This way, when roads are no longer being built and potholes slow down traffic, folks will make the switch to alternate modes of transportation and demand for "old fashioned" gasoline will decline Ta-da.

Revolution is a good thing - without it we would not have the USA. Sometimes you must force change in spite of the status quo . . . . "well, that's just the way we've always done it." If you think this is a good idea, then talk it up. If it catches on, guess who will take the lead in building people movers - yep, Exxon-Mobil. Just you watch, folks.

National Housing Disaster?

National statistics released last week regarding home sales, home prices, etc. were somewhat alarming. I received lots of calls. Please, please, please (enough emphasis?) do not be distracted from our local market by a national average. There are some pretty bad housing markets across the country that offset some really good markets - yes, overall the national average is down, but jumping out a window is not the best solution - try patience.

Make no mistake about it, homeowners selling today in the Twin Cities that have been in their homes less than 3 years may not have any appreciable gain on their sale, other than the considerable income tax benefit during their period of ownership. Like any investment, housing investments tend to payoff over the long haul - patient investors are rewarded.

Don's Early Retirement

Regarding the Don Imus incident . . . . okay, enough said . . . . on both sides of the issue.

Kentucky & Minnesota in Missouri

My long hiatus from blogging was due to a glorious spring break trip down to our 2nd home in Branson (see our story at www.Minnesota2Branson.com). While there, I was congratulated by a gentleman coming out of a stage show at Silver Dollar City for having snared such a great basketball coach at the U of M. Puzzled at the remark, he pointed out that I was wearing a U of M sweatshirt. We had a very pleasant exchange. This gentleman was from Kentucky, a huge college basketball fan, and obviously mourning the loss of Tubby Smith. He went on about how lucky we are to have Tubby, what a great person he is and how much he'll be missed at Kentucky.

Welcome to Minnesota, Mr. Smith! The folks in Kentucky think we should be glad to have you - I think they are right! NCAA Tourney here we come!

Simple Solution for Global Warming?

Okay – that was the attention getting headline for this short dissertation.

I have been an avid observer of world news for many years – there is nothing funnier than real life, folks. Even today one of my favorite television shows is the BBC World News, aired at 10:00 pm weeknights in my local market. As I recall, and as being recently brought to the attention of Congress over the past few months, we were fearful of global cooling in the 1970’s. We were headed for another Ice Age, mostly due to our collective irreverence toward the environment and poking a hole in the ozone layer through indiscriminate release of fluorocarbons (Freon for our air conditioners among other things) into the atmosphere. Shame on us, but as Earthlings who walk on two feet and sport thumbs at the end of our arms, we came up with a solution. Stop releasing the fluorocarbons and the hole will heal. Ta-da! It did – the hole healed and now we have our greenhouse back again. Oops – time for global warming - vicious cycle this environment-climate thing.

So . . . many of you already see where I am headed with this. Yep –

We need our hole back.

I am not suggesting that we go back to releasing fluorocarbons, but a nice trap door would seem to be in order. Sound too simple? Simple can be a good thing. Think about it – monitor the balance between cooling and warming, then regulate it by opening and closing the trap door in our ozone layer. A possible solution? If you think so, talk it up. Let’s call it Environmental Climatological Regulation – the salvation for generations to come. Just a thought. Peace.

A New Sheriff in Town!

Someone pinch me – The University of Minnesota has hired Tubby Smith as the new head coach for the men’s basketball program. Could this finally be the light at the end of the tunnel? I only bring this subject up because many local college basketball fans remain in a deep depression since the U of M Final Four appearance a few years ago (okay – more than a few), and I confess to be one of them. What a year that was! Not to slight the amazing run for Winona State (okay – capitalize AMAZING!), but those are difficult games to see on television or hear on radio in the Twin Cities.

Can Coach Tubby get the men’s program back to the NCAA Tournament? The Sweet 16? The Elite 8? The Final Four? Well, not likely in 2008, but he could be a huge draw for recruiting top-end talent to the program and restore fan confidence – and fill some seats, too! Go get your season tickets now, folks!

Good luck, Coach!

Globalization of Real Estate Investment

Some of us were privileged to hear from Mark Allen, CEO of the Minneapolis Area Association of Realtors, this week. One topic of interest was globalization of real estate investments – loosely translated, Americans buying homes in other countries.

Some of the reasons include relatively low prices, especially for ocean front properties, inexpensive labor that includes maintenance and domestic staff, and competent, affordable health care. Wow – there are a lot of social issues to discuss in that sentence. I have had several first-hand encounters of late with folks selling out here in America and moving to Costa Rica to live the good life on the side of a mountain overlooking the ocean and developers of large complexes in Panama. There is a noteworthy trend here – perhaps the next "big thing" now that so many Americans have already purchased a second home.

What about the quality of the investment, however? Well, John Schroder was quoted in an article for EscapeArtist.com as follows:

“Where as housing prices have gone up roughly 65 percent in the United Stated from the period 1997-2004 according to the Economist Financial Magazine, the figures are far more dramatic in the following countries for the same period: South Africa - 227 percent, Spain - 149 percent, Ireland - 187 percent, Britain - 139 percent, Australia - 112 percent”

Perhaps the lower cost of living is trumped by the higher appreciation rate of the asset itself - a win-win for the investor. If you are interested in learning more about international markets, we have a Certified International Property Specialist in our office with whom you can have that conversation.

Are you thinking about off-shore investment in real estate? With over 120,000 sales associates in 67 countries, RE/MAX is the world leader in real estate sales. RE/MAX is international real estate.

Globalization! The world is smaller than you think!

Stocks Kick Real Estate in the Pants - Huh?

Several blog postings ago, I referred to money flowing out of the stock market as it cools and into real estate. The relative advantage of one form of investment versus the other has been fodder for cocktail party debate for years. My financial planner (Tony) wrote me a P.S. with his autograph in his 2006 book, The Wealth Factor – A Team Approach, that went like this: “P.S. – Stocks kick real estate in the pants over the long term”!! Don’t get me wrong, I have the utmost respect for Tony and what he and his team have accomplished for me as my financial planners over the past 20 years (especially on tech stock IPOs in the ‘80s & ‘90s), but debating is what makes this country great and this is my blog, so I will blog if I want to.

I do not think there is a clear argument against his statement, but if I were to attempt one, I would start with an attention-getting comment like, “Stocks kick real estate in the pants (from an investment standpoint), but I would rather live in a house than an earnings report!” Ah – the debate is on!

Think about it, folks - only in America can you buy an appreciating asset, live in it, get a huge tax break while you live in it and even a bigger tax break when you sell it for a profit. Stick that in your stock-pipe and smoke it! Thanks to the tax law written in 1997, a single person can exclude up to $250,000 (up to $500,000 for a married couple) of profit from income tax on the sale of a primary residence. What would the tax bill be on $250,000 in gain from a stock sale? Not only that, when we buy a house, we create jobs for carpenters, plumbers, electricians, roofers, landscapers . . . well – you get the idea. When we buy stock, hmmmm . . like Enron, well – let’s not go there – like Nike, well – where were those manufacturing jobs created?

Then there is the discussion about real estate as an investment versus a stock as an investment - the argument is similar to above. The stock investment will appreciate over the term of ownership and you pay capital gains tax when the stock is sold. If the stock pays dividends, the owner also pays tax on that dividend each year during the ownership. Logical - pay taxes as you realize gains. How about a rental income property as an investment? Some of your purchase fees are tax deductible on the front end, repairs & maintenance fees are tax deductible during each year of ownership, depreciation is deductible each year, etc. Interesting concept, tax benefits during each year of ownership to offset income from rents collected, reducing the tax burden for the owner - every single year. Then there is the 1031 Exchange strategy option for the sale when you are ready to move on to a new investment. Hmmmm . .

I share these thoughts to fuel the debate, of course, but do so with nothing but respect for all investment strategies and encourage you, my readers, to choose whatever is best for you – real estate, of course! :-) If you are in need of a financial planner, I do refer folks to mine, Tony Parr at Wachovia Securities, www.parrfinancialgroup.wbsec.com. I love Tony, his family and his team (and also his in-laws who were very successfully in real estate!). Tell him I sent you, and something else like, "I understand real estate kicks stock ownership in the pants over the long haul"!

Where Does Santa Go On Vacation?

Almost an entire day went by without a blog - where is my caffeine? It is time to give a little plug for one of my sister sites and favorite initiative, http://www.minnesota2branson.com/.

Minnesota2Branson.com is all about helping Minnesotans get to know the Branson, Missouri area of the Ozark Mountains, with an eye toward real estate investment. Located just 665 miles from the Twin Cities, Branson offers some of the most beautiful scenery in the country, an abundance of recreational and entertainment opportunities, and a blossoming real estate market that favors folks looking for a 2nd home, a retirement property, a pure investment property or some combination thereof.

Content is being added weekly and I would guess that the site is just about 75% of a full load right now, so please take a look, and another, and another. There is even a video available about Santa’s vacation – very cute! Even if Branson and the Ozarks aren’t for you, our journey may be of interest to you and we would still love to chat.

Premature Political Campaigning?

Why on earth would I have commentary on politics or “the system”, given that I am a real estate broker by trade? Well, because first and foremost, I am a citizen, just like all of my readers. Secondly, this is my blog and last time I checked, that gives me my own personal forum to sound off as I see fit, within the boundaries of good taste and moderation, of course.

So having watched the inner workings of the Washington political scene for years from close range (I went to high school and college in the DC area, grew up the son of a Federal investigator, had a clearance with the government and worked in a vault in the basement of the Pentagon before and during my Army stint, and had the Federal government as my territory for my first ever job in sales – now that is an interesting story!), it is rather a mystery to me why the 2008 Presidential candidates are starting their efforts so early. As such, I have some questions:

Have you ever noticed that forming an exploratory committee actually means, "I am absolutely, definitely running for the office of President of the United States?"

As far as I know, the candidates already have important government jobs and I am concerned about who is doing that job for the next year during their premature campaigning?

Could (or should) any of today’s candidates get re-elected next term in their own District / State given the neglect their constituents must be feeling?

One candidate commented last week something to the effect that he was laying low at this stage because he didn’t want to peak too soon. He makes an interesting point – will all existing hard-charging, campaign-crazy candidates demonstrate extreme cases of foot-in-mouth disease or bankruptcy and fizzle over the next year? If so, what total dark horse unknown might swoop in at the conventions and be on their way to the White House? Hmmmm . . .

Following along on that train of thought, perhaps these early candidates are intended to just be out there in the public eye to rattle their party sabers and test views that will later be turned into planks for their party platforms to be nailed down at the conventions, upon which their quiet, squeaky-clean dark horse savior can walk to the podium and accept his or her nomination. Perhaps, then, these early candidates are just the ones with the thickest skin, who can weather the media (and public) storm long enough to get across the party views for the real candidate. Hmmmm . . . again.

This is one of those, “All I have are observations and questions – no opinions,” blog postings. I just had to vent a little.

Kiplinger View of the Market

My friends, Kathy Harrison & Mikal Knotek (www.financinghelp.com), at Bell Mortgage sent a note today in their weekly home loan rate sheet that included the following:

"Kiplinger this week had some positive news in that they feel the talk of a crisis may be overblown. Mortgage demand, which is adjusted to seasonal swings, is up 10% since it bottomed out in August. The economy continues to add jobs which we all know ties to the housing market. The worst downturns seem to be in line with unemployment numbers. Overall it appears median prices are dropping 4-5% this year and total home sales will fall about 8.5%. That is a correction, not a crash."

I will continue to pass along items of interest as I encounter them. It appears that there will be some recovery in the home sales market this year. Hooray for us all - consumers and real estate professionals alike!

Twin Cities Housing Market Outlook for 2007

I am often asked the question, "how's the housing market doing?" My short answer is that the Twin Cities market started to cool about June of 2005 and has remained fairly stagnant since then. The result has been increased inventory of homes for sale, longer times on market, Seller anxiety leading to price reductions and Buyer bargain-hunting. There are still Buyers and Sellers, but the overall volume of transactions has cooled considerably from the feverish pace of 2001-2004. One cause, in this writer's opinion (I love blogging!), is that the stock market has been on such a roll that there has been little incentive to cash out and put the money into real estate. As the stock market cools, as it has been known to do from time to time (that's a slight jab for my financial planner - sorry, Tony!), stock investors will move their investments out of stocks, sell their homes and move up (or buy a second home, a vacation spot, a retirement home, or perhaps one of each).

So . . . what's the future look like? Jeff Allen, staffer for the Minneapolis Area Association of Realtors, stated in the January/February edition of The Realtor, "The first half of 2007 should see an extension of current conditions before buyers begin to reawaken later in the year. The rebound will be gradual enough, faint enough in its inception and occur late enough in the year that the net sales activity for 2007 will hold relatively stable with 2006. But the seeds of recovery will be sown, and the market should show solid buyer gains in 2008."

This is just one opinion, of course, but it gives us some insight from folks that monitor these issues on a daily basis. I'll keep you posted as I gather more expert opinions - and probably offer a few of my own along the way.

In The Beginning

Here I am - day one of blogging. I admit I am a bit nervous. I am usually not an "early adopter" of technology, although a technologist in a previous life. Blogging seems to have come of age and enjoys wide appeal, so it is time for me to get started. If all goes well, this blog will become an integral part of my main website, www.HouseHuntersMart.com.

I earn my livelihood in real estate - primarily residential real estate in the Minneapolis-St Paul Twin Cities area of Minnesota, although I have been involved in commercial business sales and am an active real estate investor as well. In addition to helping home buyers and sellers, I coach real estate industry professionals and participate as part of our brokerage management team at RE/MAX Action West (offices in Chanhassen & Minnetonka).

One of my newest initiatives is to introduce Minnesotans to the good life in Branson, MO. You'll be hearing more about this here and at one of my new sites, www.Minnesota2Branson.com. Check back often for updates.

As I mentioned, this is all new to me and I am anxious to post this inaugural message. Wish me luck.