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.