Bill's Real (Estate) World, Among Other Things

We the People is Non-Partisan

2009-07-03T22:10:00.001-04:00

“We the people” is non-partisan. It may be boring to the news media, but non-partisanship is the peaceful, common sense method of moving this nation forward through elimination of waste in centralized government. The news media and majority of elected officials today talk about “reaching across the aisle” and getting things done in a bi-partisan manner. Since when did we ever have a two (bi) party system? If that were the case, then how did Jesse Ventura become Governor of Minnesota? Al Franken would almost certainly never have become Senator from Minnesota without Dean Barkley’s participation in that race. Nor would Joe Lieberman still be in the Senate. Together, we ARE the People, and WE need to be non-partisan in our approach to fixing our centralized government.

I believe that party affiliation should be removed from election ballots so that voters will only vote for someone if they know what they stand for. Fewer votes would be cast, but they would be informed votes – ones that stand for a belief instead of a red or blue color on a map and ones that were cast independently of anyone dictating the vote of another citizen. What is wrong with a candidate describing him or her self as financially conservative, militarily moderate, educationally progressive and moderate on healthcare? That description is not reflective of any party I know of, but would make for an interesting candidate. Would it not be better than a party affiliation label? It would enable legislation representing the will of the people instead of strong-arm political pressure on elected officials to vote a certain way due to a party affiliation.

Let’s face it – a party affiliation is nothing more than an endorsement by a political union. In exchange for the support of a large body of voters, a politician accepts endorsement by a political union to be THEIR representative in Washington (or wherever), not the representative of the constituents of the district, state or whatever. Why do I believe this? Simply because each legislative body has majority and minority party bosses. These bosses, as the title implies, boss around their party endorsees to comply with the will of their party – not their constituents. Candidates do not have other union endorsements under their names on the election ballots, so why are they labeled with political unions?

Each and every one of you reading this has, or knows of someone who has, voted straight party on a ballot. How incredibly improper and unfair to America, not to mention future generations. Look at the mess that has been created in every legislative body in the country as a result. This is a national embarrassment. Who among us has the will to change it? Is it you?

Celebrating Our Freedom

2009-07-03T22:06:00.002-04:00

Happy Independence Day!

My mind drifts a bit every year about this time. I try to relate the current state of the nation to what the founding fathers were thinking so long ago. I try to read the mind of Thomas M. Foster, my ancestor that arrived from Ipswich, England in 1742 to start the then soon to be American branch of our family tree. And now that I am over 40 years of age (ahem), I think my mind should be allowed to drift occasionally.

I took note the other day of H.R. 2454, the American Clean Energy and Security Act, which narrowly passed in the House recently. It will no doubt be highly modified before becoming a law, but even so, we should all take note of some of the language written into this original version by our elected congressional representatives. As a real estate practitioner, I was drawn to sections of the bill that relate to housing. I confess, I have not read the entire bill (yet), but neither did any of the representatives that voted for it in Congress by their own confession. I’d like to share some excerpts from the bill as passed by the House of Representatives. I must warn you that some of these excerpts may be disconcerting to those of you considered to be Americans, so read at your own risk.

Well-intentioned Objective:
- Effective on the date of enactment of the American Clean Energy and Security Act of 2009, 30 percent reduction in energy use relative to a comparable building constructed in compliance with the baseline code; effective January 1, 2014, for residential buildings, and January 1, 2015, for commercial buildings, 50 percent reduction in energy use relative to the baseline code; and effective January 1, 2017, for residential buildings, and January 1, 2018, for commercial buildings, and every 3 years thereafter, respectively, through January 1, 2029, and January 1, 2030, 5 percent additional reduction in energy use relative to the baseline code.

Implementation
- There shall be established national energy efficiency building codes under this subsection, for residential and commercial buildings, sufficient to meet each of the national building code energy efficiency targets established under subsection (a), not later than the date that is 1 year after the deadline for establishment of each such target, except that the national energy efficiency building code established to meet the target described in subsection (a)(1)(A) shall be established by not later than 15 months after the effective date of that target.
- Each State, or where applicable under State law each local government, shall implement and enforce applicable State or local codes with respect to which a certification was accepted by the Secretary under subsection (c)(2)(B) or paragraph (5) of this subsection, or the national energy efficiency building codes, as provided in this subsection.

Enforcement
- The Secretary shall propose and, not later than 3 years after the date of enactment of the American Clean Energy and Security Act of 2009, shall define by rule violations of the energy efficiency building codes to be enforced by the Secretary pursuant to this section, and the penalties that shall apply to violators, in any jurisdiction in which the national energy efficiency building code has been made applicable under subsection (d)(1). To the extent that the Secretary determines that the authority to adopt and impose such violations and penalties by rule requires further statutory authority, the Secretary shall report such determination to Congress as soon as such determination is made, but not later than 1 year after the enactment of the American Clean Energy and Security Act of 2009.
- Where a State fails and local governments in that State also fail to enforce the applicable State or national energy efficiency building codes, the Secretary shall enforce such codes.

Punishment
- The Secretary shall assess a civil penalty for violations of this section, pursuant to subsection (d)(3), in accordance with the procedures described in section 333(d) of the Energy Policy and Conservation Act (42 U.S.C. 6303). The United States district courts shall also have jurisdiction to restrain any violation of this section or rules adopted thereunder, in accordance with the procedures described in section 334 of the Energy Policy and Conservation Act (42 U.S.C. 6304).
- Each day of unlawful occupancy shall be considered a separate violation.
- In the event a building constructed out of compliance with the applicable code has been conveyed by a knowing builder or knowing seller to an unknowing purchaser, the builder or seller shall be the violator.

Summary
The Federal government will set lofty goals for energy reduction at the household level and dictate that state and local governments verify that the objectives are met and subsequently punish any citizen not in compliance. Punishment will range from daily fines to being prevented from selling their real property to forcing remodel projects to be completed by sellers, regardless of their ability to afford doing so. The increased costs for hiring inspectors and enforcement personnel, their management chain and administrative support staff, office space, vehicles, tools, increased caseloads in the courts and the appointed defense attorneys for those defendants unable to afford a defense will be borne by the taxpayers through a combination of income and property taxes, plus applicable fines.

Okay, so rewinding to the beginning, WWTFFD (what would the founding fathers do)? Well, I think they would keep it simple. They were interested in keeping centralized government to a minimum – keeping government localized. They felt so strongly about this, in fact, that they had a tea party and started a revolution. They would say that the central government was intended to provide for national defense, a monetary system and the general health and welfare for its citizens, and everything else should be handled by the States. Beyond those fundamental provisions, we are blessed today with organizations such as the United Nations that provide a forum for representatives of all people from around the world to deal with global issues that are not the focus, nor fault of any one nation. Yep – I think old Thomas M. Foster would agree. Just keep it simple.

The True American Spirit
Let me inject a few more observations. I do not believe the hybrid vehicle concept was driven by any government decree. I do not believe Native Americans built mud huts to keep cool because the government told them they had to. I do not believe multi-layer glass windows were introduced as a result of government programs. I do believe that these were all independent thinking solutions by enterprising individuals and companies who had good ideas and the wherewithal to develop their products and bring them to market. Pure and simple – American entrepreneurial spirit and capitalism at its finest.

Let us all join together and help Congress get back to basics – providing for a strong national defense, a monetary system and the general health and welfare for its citizens. 2010 is just around the corner. Vote responsibly!

Happy Independence Day!

HDTV Mis-Direction?

2009-06-11T09:33:00.003-04:00

Well, tomorrow is the delayed cutover to HDTV. I don't particularly know what that is all about, but according to the news briefs I heard yesterday, the delay was due to approximately 6.4 million households not having a converter box at the time the original cutover was scheduled to occur. This may sound a bit cynical, but the government was apparently quite concerned that their message was not going to reach 6.4 million households. In response, they spent $2 billion (that would be $2,000,000,000) in taxpayer money to delay the cutover and equip an additional 3.6 million of those households for HDTV . . . there seem to be 2.8 million still not capable of receiving the new signal. The government apparently believes their message to be of such importance that it was well worth the $2,000,000,000 in taxpayer money. My understanding was that the government was to take care of the health and well-being of its citizens, provide a financial system and a strong defense. I am trying to understand how HDTV fits into that . . . . . I suppose it could just be an overwhelming lobby effort by the television industry - talk about special interest influence in Washington - sheesh.

As I stood in line at my local grocery store the other day, I thought of an alternative to investing $2,000,000,000 in tax dollars for TV. Next to me was a pre-prepared bag of food for the local food shelf marked at $5. It contained enough food and ingredients to feed a family for a day. I couldn't do the math in my head, since $2,000,000,000 of tax dollars just had too many zeroes for me to comprehend. Since then, I have divided the $2,000,000,000 by $5 and learned that hour hundred million families could have enjoyed a good meal - that is 400,000,000 families. Think about that - isn't it mind-boggling?

So just for the record, if I had a legitimate choice of how my tax dollars were to be spent, I would have fed the people instead of making certain they had TV in their living room. It would have been a pretty good message for the government to deliver and even the lobbyists for the television industry could have taken some credit - I don't really care about that. 400 million families might have cared, however.

Twin Cities Real Estate Update

2009-05-22T17:12:00.004-04:00

It seems like ages ago when I last provided an update for the local Twin Cities real estate market, due in part to the changes that have been underway. Whether you are a Buyer or a Seller, the general trend is good - here are some reasons why:

Conforming home loan rates remain at historic 40-year lows;
First-time home buyers are eligible for a $8,000 tax credit if they purchase before December 1, 2009;
The number of homes available for sale in the Twin Cities is over 20% lower today than a year ago;
The housing affordability index is a record 219 right now, meaning the median household income in the Twin Cities is 219% over that required to purchase the median priced home.

It is truly a perfect storm for buying a home. I'll let the Minneapolis Association of Realtors explain this in a bit more detail:

http://www.youtube.com/watch?v=KXbOx925NbM

So . . . what could anyone be waiting for?

Big 3 Automakers Double-Dipping?

2008-11-19T15:00:00.003-05:00

When is enough enough? Each of the Big 3 automakers has received immense local and state tax breaks to locate their manufacturing and research facilities in this state and the next. Politicians have clamored around them for years because they see manufacturing as job creation. To some extent, this is true. The state and local governments make tax concessions on the front-end to the automakers in exchange for building a manufacturing plant or research facility. The local and state taxpayers must make up the difference, because heaven forbid that tax concessions be covered by a reduced government budget. The new facilities commence operation and the local politicians pat themselves on the back and get re-elected a couple of times. Let's not overlook the fact that the Big 3 auto industry has not been expanding in many years, so those "new jobs" were actually replacement jobs. For every "new job", there was a worker displaced somewhere else - but then, that is some other politician’s problem . . . .

Then reality sets in. The auto industry is highly competitive with a broad range of interchangeable vehicles to choose from, i.e. - they all get the passengers from point A to point B, so differentiation is difficult. As time goes on for any specific product line, costs must drop because new competition will be driving down the actual net sales price. Ah - now the reality part. The manufacturing facilities are loaded up with union laborers who, by contract, are getting regular salary increases. The automakers used the government tax incentives to get by in the early going of their operations, but as time passes, the contract labor rates eat that up and more. They are then left with a top-heavy salary burden that cannot be resolved, even with all the off-shore parts manufacturing they can farm out.

So . . . . as we contemplate giving the Big 3 another round (the double-dip) of taxpayer money - the $25 billion discussion of the day - shouldn't we step back a bit and ask why? Saving jobs is a typical response, but for how long? Management fundamentals seem to be missing in action. I particularly enjoyed these reports from today’s hearings in Washington, and applaud these Congressmen:

-- Rep. Brad Sherman, D-Calif., asked the three auto chiefs seated at the witness table before him to raise their hands if they had come to Washington on commercial airliners. No hands went up. Then he asked if any planned to sell their corporate jets. Again, no hands went up.
-- Sherman and Rep. Gary Ackerman, D-N.Y., told the auto executives they were having a hard time justifying to their constituents bailing out companies whose chiefs fly around in expensive private jets.
-- Ackerman said there was "a delicious irony in seeing private jets flying into Washington D.C. and people coming off them with tin cups in their hands."

Given this reaction from the other wing of Congress within his own party, Senate Majority Leader Harry Reid promptly asked President Bush to standby in case he needed help in getting a Big 3 bailout pushed through. Excuse me? Good leaders listen – get a clue, Harry!

Oh, and by the way, the double-dip is actually a triple-dip. Remember the manufacturing plants that were built in exchange for local and state tax concessions? Well, at the Federal tax level, the manufacturers are rewarded for modernizing their manufacturing facilities - yet another tax benefit for big business. Why manage? Uncle Sam will always come to the rescue! What class did all these folks take in grad school, anyway?

Congratulations, America! Don't Let Up!!

2008-11-16T10:49:00.003-05:00

A couple of days ago I noted the gasoline price at my most frequented filling station at $1.89 per gallon. I was amused and reflected back to late spring when many candidates in the Presidential primaries from both parties were supporting the idea of suspending the Federal gas tax for the summer months. Only one candidate stood up for addressing the problem versus buying primary votes at roughly $60 apiece (the average saving per household with the gas tax scheme for the entire summer). Only one candidate spoke openly that the problem was the demand for gasoline and if demand was reduced, that the price would follow - his opponents scoffed at him as being an elitist and not being in touch with the average American. Gosh - imagine that - someone trying to understand and solve the problem instead of giving a few token dollars for votes. At the time, there were 17 candidates still duking it out in the Democrat & Republican camps. Statistically speaking, 94% of them were clueless about the problem and thought $60 per household would make Americans forget about it. Amazingly enough, they are almost all still holding their elected offices today in spite of this shallow thinking. Wake up, voters - you really need to pay attention!

At our house, we sold our gas-guzzling SUV and picked up a small (American made) economy car which immediately started saving us $75/month in gasoline expenditures. Many other Americans did the same thing. We were delighted to participate in this exercise, proving that free markets can and do correct themselves - without government intervention.

So now we are seeing sub-$2/gallon gasoline after just 5 months of reducing our collective demand - down from $4/gallon. My message today is very simple. GASOLINE IS NOT ON SALE, folks. Do not go out and start guzzling gasoline because it feels like it is "on sale". A 50% price drop at the pumps was due to reduced consumption. Increasing consumption will have the opposite effect. It will require immense discipline on the part of all American consumers to keep the price down and frankly, to cause it to drop even further. Gasoline cost roughly $0.24 per gallon when I first learned to drive. Wouldn't you like to see that on the sign outside your local filling station?

And just to expand this thinking a bit, as we have reduced our consumption of gasoline, would you be open to the notion that in so doing, we have also reduced our harmful emissions into the atmosphere and helped the environment? Wow - an amazingly simple thing like driving less and converting to more fuel-efficient automobiles providing more net income to your household AND helping improve the environment at the same time. The next time someone comes to my doorstep and wants my signature on a petition and a donation to fund a political action committee / lobbyist to buy influence in Washington regarding an environmental cause to cleanse my conscience, I can now engage in a meaningful conversation about how I have already made a difference and suggest that they are the new endangered species. We may be on to something here, America. Keep up the good work!

Get Ready - Get Set - Rebound!

2008-08-21T12:24:00.004-04:00

It has been awhile since I provided a market update for Twin Cities real estate. I have been observing the data with renewed interest of late. We have now identified a trend in two areas:

1) The number of new listings coming on the market for the past 5 consecutive weeks is lower than it was for the same period a year ago; and
2) The number of new sales (pendings) has been higher for the past 6 conscutive weeks than for the same period a year ago.

What does this mean? My interpretation is that we are in the early stages (not widely recognized) of a market rebound. Several states in the nation have already noted the same trends and have declared a turnaround. Minnesota is about to join those ranks. Homebuyers should get ready . . . get set . . . and GO! Savvy investors already have - now it is time for the owner-occupied sales to kick in. Don't be late for the party!

Nonsensical Fed Gas Tax Holiday - Aaaarrrggghhh!

2008-05-04T13:17:00.005-04:00

The audacity of politicians with shallow election year proposals - preying upon the emotions of the masses - shame on them all!

Okay I have done the math - our household will likely pay $62.50 worth of federal gas taxes between Memorial Day and Labor Day. Even if that is the same for every driving household in America, the problem of gasoline prices would not be resolved. In fact it would be worsened. Consumption would increase due to a false sense of "hey - gas is on sale - let's drive somewhere for the heck of it because it is cheap!" Consumption goes up - demand goes up - supply goes down - price goes up. This is not rocket science - it is the immutable law of market supply & demand. What new problems would be introduced as a result of the gas tax holiday? That is simple - the account that funds repair & construction of Federal highways and bridges (the Interstate Highway System) would come up short and work would need to be rolled back or another source of tax funding would need to be created to make up the shortfall - cool - a new tax. There is no free lunch, America!

Gotta Reduce Consumption, America!

The only (emphasize ONLY) way to reduce the price of gasoline at the pump is to reduce consumption over the long haul. If a politician wanted to solve the problem, the focus would be on reducing consumption, not finding more supply (by the way - if we decided to go after the oil in Alaska today, it is estimated we would see the oil in about 2014) or playing with taxes (fun topic - could we please pay more?). So . . . what might a clever government do? What does the government really have control of? Hmmmm . . . remember the mention of the Federal highway system - yes, the Interstate Highways in America. Those are the highways that we use everyday to get from one place to another at a high rate of speed. Their purpose, however, is to allow the military to move resources from point A to point B during a national emergency. They are controlled by the Federal Government. Here is an idea - instead of a 3 month gas tax holiday, how about a monthly one-day closing of the Federal Highways? Huh? How can this help?

Ah - let us count the ways! Americans would need to alter their lifestyle one day a month. They might stay at home or in their own neighborhoods and discover alternate activities such as gardening, playing games with family and friends, walking with neighbors, visiting local parks and playgrounds, discovering the natural beauty of their immediate surroundings vs. that found 40-50 miles away enabled by the Interstates and a 35 minute ride at 65mph. What would the residual impact of this monthly closing day? Oh my, well, let's see . . . . um . . . that list might include increased family & community interaction, reduced pollutants released into the atmosphere, improved health of nature and humans, reduced stress, increased support of local "mom & pop" businesses . . . the list is seemingly endless. The impact upon gas prices at the pump? Well, the inverse of the gas tax holiday strategy, of course - consumption goes down - demand goes down - supply goes up - prices go down. Once again, the immutable law of supply & demand.

Okay - let's review this idea of a Federal Highway holiday (NOT a gas tax holiday):

Lower gas consumption, lower demand = lower prices
Lower pollutant emissions = improved environment
Increased family / friends / neighborhood time = greater communication, reduced stress
Improved climate for local, small businesses = improved economy

Okay - the reality is that all Americans can decide to just stay off the Interstates one day (or more, for that matter) each month and accomplish the same thing without government intervention. However, as we all know, we just aren't that concerned or committed to the ONLY solution. Thus, we need our elected officials to watch out for us - sad, but true. And all this can be accomplished via Executive Order - yep - the President could order the Federal Highway Holiday Program without our dysfunctional Congress - pretty cool, huh?

I know, I know - you think it just wouldn't work because of this, that or the other thing. Really? That is what exceptions are for - yep, public transportation and emergency response vehicles could continue using the Interstates on the Holidays. Maybe (just maybe - gotta think about this one) even food hauling 18-wheelers. Pretty cool, huh? Now you are seeing the possibilities, aren't you?

In the overall scheme of things, it is a bi-partisan get well plan for America. It would reduce dependence upon oil, create demand for alternative products such as short-range electric vehicles (new jobs), improve the environment, boost small businesses (the majority of America) and re-introduce families to themselves - anybody really have a problem with any of this? Talk it up, folks. Thanks for listening!

Sense & Nonsense aka Focus & Distraction

2008-03-02T22:35:00.005-05:00

I have often described this political season as entertaining, much more so than any in my memory (although Ross Perot was nothing short of entertaining, even though he was as serious as any candidate could ever get). Just to get the record straight, however, I do not want entertainers / celebrities to influence or determine the outcome of an election. I do not care what a bunch of comedians playing to a live audience in NYC think any more than a talk show host in Chicago. Nor do I care about union endorsements or those of other politicians, veterans groups or super delegates, for that matter. I also discount the importance of race, gender and age. I believe the ultimate decision lies within each eligible voter and the majority opinion of those that vote should (and will) determine the ultimate winner, without any person, entity or special interest group telling [ ordering ] voters how to vote. To think otherwise would be to rely upon the National Enquirer or People Magazine for our news. That thought scares me - it scares me a lot. I hope it scares you, too.

Let's get real folks - we have a few serious problems to take care of in this country, among them the exportation of jobs, a rocky economy, national security and International relations. Let us all listen to our candidates and do the right thing - vote our own hearts and conscience - not that of others. Really - this is important. As always, thank you for reading.

Twin Cities Market, Revisited

2008-01-20T11:28:00.001-05:00

Last March, almost a year ago now, I commented on the Twin Cities real estate market. Among other things, I made the observation that the local real estate market was weak, in part, due to two factors: 1) the stock market was strong and 2) a large percentage of local buyers were investors. Let me expand on that.

With a high percentage of buyers being investors (reportedly as many as 1 in 4) in the Twin Cities and with the strength of the stock market, a large percentage of available home purchasing power was invested in the stock market. I suggested at that time that we would see a recovery in the real estate sector when we saw a decline in the stock market. Why? Simply because savvy investors are constantly rotating their money into the market where they can realize the highest rate of return - the old buy low - sell high strategy.

Time to Buy? You Bet!

Having said that, what are we facing today? Well, the stock market has been high for some time and showing signs of faltering. The real estate market is low, real estate loan interest rates are incredibly low and inventories of available properties are high. This is a perfect storm for real estate investment, whether for personal or pure investment purposes. Is anyone paying attention? Yes, indeed. Showing rates of existing properties are on the rise. Savvy investors are returning from the faltering stock market and buying multiple properties in blocks.

What Next?

Well, savvy investors almost always win. Their re-entry into the real estate market will reduce the supply of properties, causing the inevitable rise in prices - good for sellers, bad for foot-dragging buyers. Is there a pent-up demand for housing? Probably. It is said that there is one home purchased for every two jobs that are created. There have been 5.4 million jobs created over the past few years, so we could anticipate a tidal wave of buying when everyone takes notice. My advice is that if you are a buyer in 2008, do not wait for rising prices to jump in - the time is now.

No, Joe - Say It Ain't So!

2007-11-27T20:26:00.000-05:00

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

2007-10-23T22:18:00.000-04:00

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?

2007-09-19T12:50:00.000-04:00

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

2007-09-14T18:07:00.000-04:00

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?

2007-09-01T23:40:00.001-04:00

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?

2007-09-01T14:23:00.000-04:00

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

2007-08-31T16:08:00.000-04:00

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

2007-08-25T21:28:00.001-04:00

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

2007-08-25T21:15:00.000-04:00

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

2007-08-18T12:54:00.000-04:00

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

2007-08-17T20:12:00.001-04:00

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?

2007-08-07T22:06:00.000-04:00

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

2007-06-27T23:47:00.000-04:00

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

2007-06-20T22:09:00.000-04:00

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

2007-06-16T17:58:00.000-04:00

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

2007-06-14T17:06:00.000-04:00

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

2007-06-13T21:25:00.000-04:00

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

2007-06-12T19:39:00.000-04:00

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

2007-06-02T14:51:00.000-04:00

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

2007-05-25T17:11:00.001-04:00

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

2007-05-11T18:06:00.000-04:00

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

2007-05-03T17:48:00.000-04:00

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

2007-04-28T12:24:00.000-04:00

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

2007-04-18T14:20:00.000-04:00

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

2007-04-17T15:21:00.000-04:00

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?

2007-04-14T12:16:00.000-04:00

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?

2007-04-14T12:06:00.000-04:00

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

2007-04-14T12:05:00.000-04:00

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

Kentucky & Minnesota in Missouri

2007-04-14T11:57:00.000-04:00

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?

2007-03-27T13:21:00.000-04:00

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!

2007-03-23T11:52:00.000-04:00

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

2007-03-21T20:30:00.000-04:00

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?

2007-03-20T19:48:00.000-04:00

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?

2007-03-19T18:12:00.000-04:00

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?

2007-03-18T10:02:00.000-04:00

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

2007-03-17T18:32:00.000-04:00

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

2007-03-16T20:46:00.000-04:00

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

2007-03-15T19:56:00.000-04:00

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.